Word: stocking
(lookup in dictionary)
(lookup stats)
Dates: during 2000-2000
Sort By: most recent first
(reverse)
...options are seductive. Yet, in this example, if Oracle fails to reach $85 by mid-July, the call option will expire worthless, the entire $600 lost. That's the downside, the part that puts off sensible investors. More often than not, near-term options, even on a hot stock, expire unused...
What's the right way to use options? Say you're going to buy a house in October and will need to sell stock to raise the down payment. You could sell now and put the cash in the bank. Nothing wrong with that. But if you're banking on a depressed stock like Microsoft and think it will rebound, options can protect you against further erosion while giving you much of the potential gain...
Here's how: an October put option giving you the right to sell at $70--about where Microsoft currently trades--costs $5 a share. If the stock swoons, you still get to sell at $70. For that right you give up the next 5 points of gain but capture everything beyond that. A similar strategy can bridge you to the point at which you've held a high-flyer 12 months, qualifying for favorable capital-gains-tax treatment. "It puts a floor under your wealth," says Lee Reid, head of retail options at A.G. Edwards...
...general, use options only in tandem with stocks in your portfolio--to lock in gains and protect against events like an earnings report or a court ruling. There are exceptions, like Grandma's bull-call spread. That's a fairly conservative play in which you buy one long-term call option and sell another at a higher strike price. You lock in most of the difference--though the stock must go up, and if it goes way up, you lose the excess gain. If you've got a big portfolio, odds are there is an options strategy for you. Talk...
DOUGLAS DAFT Coke CEO still faces Johnny Cochran but settles bias suit, and the stock is bubblin...