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Subject:  Crazy Market Date:  5/3/2008  8:10 PM
Author:  DCWD40 Number:  376 of 377

I buy call and put options based on the premium for the option. Mostly I buy in the money options -- or just out of the money. Recently, I have been buying only in the money options because the premiums have been (get this) very low. For example, two weeks ago I purchased Marvel June $25 calls at $3.40 when the stock was trading for $28.95 a share. The $30 calls were a buck -- a stretch because my price target for the stock was $32 a share at best.

I have been buying mostly calls over the last couple of months. Every time I look at buying a stock, I look at the options. More times than not, the options are a better trade than buying the stock (because the number of dollars being expended is a fraction of just buying the stock).

I have traded stocks for over 40 years. The current market is very interesting. Some days I find premiums so low that long-term options look very good (like Microsoft). Other days I will look at the options and decide owning the stock is so much easier. There are two markets forming and anyone who doesn't know about options is probably missing a very big opportunity to keep a lot of cash in their accounts while having great exposure to great companies.

I'd be interested in knowing if anyone else is finding some big differences in the premiums they are seeing day to day and group to group.

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