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Strategies & Market Trends : The Market Taught Me That......

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To: Paul van Wijk who wrote (77)	11/8/1997 10:25:00 PM
From: benmoti	Read Replies (1) of 151

Paul, Thanks for your advice. Well I and Ricardo were discussing a strategy of buying a stock at its lowest by using writing naked put and Stop sell. Well APM is trading at 21 3/8 and if one sells a nov20put can receive $1. If APM expires above 20 a $1 is being made, otherwise the put being exercised and the seller must buy the stock say at 20. Since he has already made $1 then his cost of buying the stock is 19. If APM goes down further a Stop at 19 is a break even. Then selling put18 and repeating the process over again until APM is drag down to say $1 a good trader will end up buying that at $1 and hopping to make up the losses on a bounce back. As far as trading this stock I traded lots of it when it was over 30 and made good. When the sector got hit I had to reduce my position by 65% with some losses. And later I bought into a longer term in-the-money call option. As far as the fundamentals of the co. certainly it has not been changed in a past few weeks and I believe it is in a good standing. As to WDC's transition to MR-technology it is not so clear how long it will take them. Also not so sure how much APM income depends on sales of MRs to any co. Behrouz.

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