Question for Silver Hilton

[2LEYS]

What do yoy think of INTC Jan 05 at $40? It is going for $1.85. I am getting some money coming in and thinking of buying.

[Silver Hilton]

Well, I'm not a huge fan of using options on the long side - the spreads tend to eat you up. I'll buy some puts from time to time, since they are a bit safer than shorting. I sell options more than I buy them. NOt even doing that now, because the implied volatilities are low, which means that they are cheap right now. Which is the only thing going for you in this trade, I think.

INTC is trading at about 33 right not. The call is 1.85 or so. INTC has to go to 42 (the $40 strike price, plus the call premium, plus your commission cost) for you to start to make money, or 27% in a year. Both INTC and the market in general have had a pretty good run. INTC is a large cap, which generally don't show the magnitude of gains of smaller companies. If you buy these calls, you need INTC to grow substantially more than 27% in order to profit. Those seem like long odds, my friend.

On the other hand, INTC is forming the right side of a two year long base, and might grow out of that base. SO INTC as a general bet itself might be fine. But it would have to grow a lot for your options to make money.

IF you are hell bent on using options, I'd buy something that is near the money or in the money, so that you profit from near term movement. The 32.50 would be a better bet, for my way of thinking.

But generally, I avoid using options.

For most people, a good mutual fund is a better idea. If you are looking for near term investments, I like FWHT, BSTE, PWAV, or ADIC. If you are focused on INTC, I'd wait for a correction, then use some options that are nearer the money than the Jan40's.

Is that what you wanted to know?

BTW, I am not an investment advisor. I don't even play one on TV. In particular, options are risky, have expensive buy-sell spreads and commisions and usually only make money for those that sell the options, not those that buy them.

[ 01-16-2004, 08:05 AM: Message edited by: Silver Hilton ]

[lost_sailor]

All that financial jargon is exhilirating! OOOOO! :smile:

[Silver Hilton]

Sailor, you ain't heard nothing. Just wait until I start babbling about moving averages, stochastics, and exit strategies. It's enough to make even my head spin.

Couple of interesting companies for fishermen to invest in:

GRMN, or Garmin, the makers of GPS equipement. Very solid financials, good chart, and I think great prospects.

KVHI, who make mobile internet technology. Very small company, whose sales disappointed in the recent weeks. If they level out, they have a lot of promise. They make antennas and sell connection service for mobile high bandwidth internet access. So, with their gear, you can Ifish from your boat. When this technology becomes affordable, or if 5 cents hears about it, the real time trash talk possibilities are somewhat scary. You could have brag pictures on the net before the slime quit dripping off of the net.

XMSR - satellite radio. CD quality radio anywhere in the country. A long way from making money, but tehnically an extremely strong company.

[ 01-16-2004, 08:23 AM: Message edited by: Silver Hilton ]

[STGRule]

Aren’t foreign languages romantic? (((sigh))) [img]graemlins/hearton.gif[/img]

[Birdnest]

[img]graemlins/lurk.gif[/img]

[steelheadslayer]

[img]graemlins/dork.gif[/img] , that's how much I know about the market. STG Rule, if that 'foreign' language is romantic to you, you NEED to get out fishing more. :grin:

[Silver Hilton]

Originally posted by STGRule:
Aren’t foreign languages romantic? (((sigh))) [img]graemlins/hearton.gif[/img]

<font size="2" face="verdana,arial,helvetica">Baby, I want to watch your slow stochastic cross the 20 line, while your On Balance Volume peaks... :grin:

Now you know what I do all day in between smart aleck posts.

[Silver Hilton]

Yeah, I guess, but the odds favor the house too much. I'll stick with the underlying equity, thank you.

[WheresMyBobber]

SH, I didn't mean gambling in a good way...although I have dabled in options a little, I too prefer the underlying equity. My options account doesn't get much activity.

[Riverkeeper]

When this technology becomes affordable, or if 5 cents hears about it

<font size="2" face="verdana,arial,helvetica">:grin:

[WheresMyBobber]

There is no purer form of gambling than the options game!