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Sorry to ask for more, John, but I'd enjoy seeing your put prices and rationale behind these plays. Also, do you have a good fundamental, short resource for understanding LEAPS? Thanks more.

LEAPS (Long Term Equity AnticiPation Securities) are nothing more than long term options that expire in January each year. You can buy LEAPS about 2.5 years in advance, as typically the 2004 LEAPS start selling in July of 2001. Just like options, you can have calls and puts. Each LEAP contract controls 100 shares. Here's a site for you to read up on LEAPS.

Also, my favorite LEAPS book is "LEAPS- What They Are and How to Use Them For Profit and Protection" by Harrison Roth. But I'll warn you it is a little pricey ($60.00), but maybe your local Library has it.

My Rambus and Cree LEAPS are both 2003 call LEAPS I bought earlier this year. My CREE LEAPS are 2003 15 calls, that I bought at various times this year, but always when CREE was below $20 a share. My basis is about $4.50 on average as I recall, but keep in mind that many of these contracts were bought when CREE was near it's yearly low in early April.

My Rambus LEAPS are 2003 Call LEAPS with a strike price of 20. My basis in these LEAPS is 1.20 per contract.

I buy LEAPS for different reasons than I invest/trade using my TA system. First, I would only use about 3-5% of my portfolio to purchase LEAPS. I kind of consider it my gambling money, and I'm willing to lose it all. When I buy LEAPS, I'm looking at situations that I think are extremely undervalued relative to what I think the price will be by the LEAP expiration date. In the case of Rambus, I believe that they got the raw end of a "home court" decision in Richmond last year that will be overturned by the Federal Court in Wilmington, DE. Let me say I believe that it is at least a 50:50 chance the verdict will be overturned, and the upside if the verdict is overturned would likely put the stock into the 50's. So I think it's a good bet. However, my fear is that the case could now drag out past Jan 2003, making my bet a losing bet. But I think it is worth the risk. CREE has several new technologies that are just waiting to take off. I believe that CREE will be a $100 stock in 2-3 years. They were just added to the MidCap 400 stock index, which means a lot of index funds have to buy Cree. But they are working on a blue laser, which will hold 3-4 times the data on a disc than the conventional Red Laser(due to a shorter wavelength). This could revolutionize the CD/DVD industry. They are currently shipping samples for evaluation and expect to announce the product in the first half of 2002.

I hope this is the type of stuff you are interested in.


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