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Technology Stocks : Dell Technologies Inc.

DELL 138.22

-1.6%

3:59 PM EST

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To: JRI who wrote (143349)	9/30/1999 4:49:00 PM
From: rudedog	of 176387

john - I can understand why some long investors are disgruntled by DELL's flat trading range but I'm not complaining, just trying to understand what is likely to happen in the future. Maybe I'm just naive but it seems to me that a very solid stock which has shown itself to be resistant to drops below a certain level, and has good fundamentals, but for whatever reason gets stuck in a range is an ideal candidate for selling covered calls... the perception of value keeps the premiums up, and the range lets me keep most of the premium. That's what I have been doing on both DELL and CPQ for a while, based on advice I got late last year from Chuz, edamo and others who laid out the strategy for me. The way the stock has moved this year was ideal for this strategy. The share price appreciation combined with the call premiums has given me a nearly 30% return on my DELL investment this year as opposed to the 13% I would have on the underlying stock alone. Premiums on CPQ calls have not been as good but still I made up for some of the drop in CPQ share price in 1Q99, which positions me well for any future gains. I'm not recommending option plays (or ANY transactions) for others, especially since I am just developing my understanding of option dynamics, but it worked fine for me this year. As I said in an earlier post, my only real concern is to be either in a straddle or with puts sold when DELL starts to move up again.

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