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Author: NuclearElvis Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 3871  
Subject: Fighting the Dot Com Boom Date: 7/10/2007 9:08 AM
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In the late 90s-early 2000's, the Dot Com boom created a situation where I thought I could time the reversal correctly. I sensed a bust, but I was trying to fight it about half-way up. While all the news articles even around that half-way point agreed that it was getting excessive, the boom marched on.

One of those was AOL, as I kept trying to buy cheap Put options with shorter term expirations. While I did assess correctly, that AOL was going to crash eventually, timing was terrible, I kept missing, and the short term options kept expiring worthless.

What I learned from this volatile market, which could apply in today's booming market as well:

1. If the market shows signs of significant divergence in the future, don't just guess in one direction- play a Straddle (calls and puts) and ride the volatility in whichever direction it goes.

2. If you are committing to one direction, don't play it short term, buy LEAP options with further out expiration dates. If I would have simply bought one set of LEAP puts instead of the multiple short term buys of regular Puts, even around the same strikes (were around 80 I believe), then I would not be posting here on this board. (yep, woulda shoulda coulda)

NE
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