NOTES ON Yahoo (YHOO)
Collar

1) Yahoo, a historically volatile stock, bottoms out and then
trades through resistance of a downtrend in mid-August 2003.

2) Yahoo then trades in an uptrend from a price around $33.00 in
late August out through January 2004 with a price high of
$46.00. This represents a 40% increase in 4 months.

3) During this uptrend, Yahoo had several gap openings which are
considered very volatile events. There are 3 of these gaps in
October 2003 and 2 in November 2003.

4) Further, Yahoo has many large intraday range days. This also
points to a higher level of volatility for this stock.

5) This uptrend that Yahoo trades in has a wide range. The stock
fluctuates widely from the mid-line of the range. Again,
indicative of higher volatility.

Conclusion: Yahoo offers the investor a good upside opportunity.
However, in a stock as volatile as Yahoo, there is also large
potential for loss also.

Here, a maximum protection strategy is advised. Under these
higher volatility situations, the collar would be better then
the protective put because of overall cost.

When trading a stock with such high volatility, the investor
must be aware that option premiums will be expensive if not
prohibitive. The collar gives the investor the needed downside
protection at a much lower cost (due to premiums received from
the sale of the call) while still allowing room for capital
appreciation.