America On-Line: will it survive ...? Message Board

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Technology Stocks : America On-Line: will it survive ...?

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To: chenys who wrote (3115)	5/15/1997 10:24:00 AM
From: yard_man	of 13594

Right q y, but also if you only do this on a stock that you wouldn't mind purchasing at a given level -- the stock may fall further so that the stock is "put" to you. In that case your cost basis for the stock is the price it was put to you minus the price of the put you sold. To give you a concrete example: Some weeks back I became interested in purchasing GEMS which had been hammered pretty badly. It is tough to pick a bottom sometimes when a tech stock is falling. I bought a few shares around 15 -- picked up quite a bit more around 11. A that point I wouldn't have minded owning a few more hundred shares if I could get it somewhat cheaper. I did wind up buying some more at 9 and change. Suppose instead when it was around 10 I sold puts for the # of shares I wanted. If it didn't get below 10 I'd keep the premiums, if it did my net cost for the purchase would be less than 10 dollars a share. I think it's kind of a win-win situation if you really wouldn't mind owning the shares and you "think" that a stock has bottomed. What do you think about the strategy?

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