Replies to post #27284 on Intel Corp (INTC)

[wbmw]

Dougie, what did you do, get someone else to compose your response, and then pass it off as your own? This doesn't sound anything like you. At any rate, please share with him/her my response:

Re: I don't think you fully understand options. One, you wouldn't exercise it, you'd sell it. Two, if the fall happened in advance of Jan 21st, there would be time premium left (though smaller as it gets more in the money), so you don't need the stock to reach $23.60 in order to double your money, if it falls soon enough.

This is true. I could make a lot more money selling the option itself, but only if the stock depreciates enough in the short term, which I am not expecting.

Re: This is just stupid. The equivalent contrarian position would involve buying calls with similar leverage, not buying common stock.

Tell that to whoever the other guy is that posts under the Chipdesigner alias. He criticised options by claiming that common stock doesn't expire. So I told him to consider how much less likely it would be to double or triple your money using stock trades.

And for what it's worth, I only very rarely trade options. It's usually when I have a fairly good gut feeling that the market is wrong about the direction of a stock, as they are currently with AMD's valuation in light of Intel's upcoming product line.

Re: Again, this is not true as stated. For example, if AMD dropped to $30 tomorrow, you could get out, probably with a small profit.

Again, probably true, assuming a dip in the short term, which I don't expect. This is and was always meant to be a 9+ month play.

Re: If you hold to expiration, you're counting on AMD being below $26.80 in January. Seems rather unlikely.

Why is it unlikely? You think AMD will hit their expected performance ($1.50 EPS this year, $1.90 next year) in light of Intel's more competitive product line? Analysts have revised AMD's earnings up over 30% in the last 3 months... based on what? Most likely, the notion that Intel will continue to mess up. If that's the basis for your strategy, well, good luck.