The LEAPS Option Trader
105 W. Monument Street
Baltimore, MD 21201
Wednesday, September 22, 2004
Email – #202
** Now for Something Completely Different
The move in gold and energy is doing wonders for our Placer Dome, Dynegy and Chesapeake positions. Our Placer spread is trading at new highs, we’re up almost 100%, as is our Chesapeake spread, up more than 2,000%. Dynegy is within spitting distance of our $5 strike with more than a year and four months to go. Even laggards like Lucent and Nokia are showing signs of life. In fact, our Nokia spread has moved up substantially in the past two weeks. And, our S&P MITTS are performing very well, providing us with all the upside of the market with no downside.
While it is unfortunate to take losses like we did in Toll, there are many more positives waiting to happen in our portfolio. I think the recent Interactive call, which WILL be volatile, could prove to be a huge hit in the months ahead if the market continues to flex its bullish muscles.
One more thought to remind you of the effectiveness of LEAPS versus owning stocks in this type of market. Take our Toll position: If we had shorted the shares with a 25% stop loss, we would have been at risk four times more than we were by using the option with a 50% sell stop. The goal here is to hit it really big whenever possible and minimize dollar losses in the event a position goes against us.
Regards,
Karim Rahemtulla
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Bio:
Karim Rahemtulla is the former Investment Director of The Oxford Club. The editor of The Smart Options E-Report, The Income Trader – A Covered Call Strategy and The LEAPS Option Trader, Karim is also a regular contributor to The Oxford Club Communiqué. His highly successful trading systems use covered calls and LEAPS to boost returns on blue chip stocks, and during the bear markets of 2000 and 2001, his picks outperformed the major market averages. Educated in England, Canada and the U.S. and fluent in several languages, Karim travels the world to find the best investment opportunities for our members.
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