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Technology Stocks : Network Appliance
NTAP 119.39+1.8%Dec 10 3:59 PM EST

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To: kas1 who wrote (4773)10/21/2000 12:32:04 PM
From: Uncle Frank  Read Replies (1) of 10934
 
>> The calls were on my entire INTC stock position. Therefore, what I "lost" was indeed made up by the appreciation in the stock.

If you analyze it, I think you'll find that the retained appreciation was substantially larger than the transaction loss on the covered call trade. It would be interesting if you'd publish the percentages of this real life example.

>> You can lose a lot if the stock declines.

In terms of this discussion, that's a moot point. I'm assuming that intc is a core holding and that you were committed to holding it any rate. But in this case, you've enjoyed the advantage of a small hedge, and are better off than you would have been.

>> This is not a risk-free strategy.

There are no risk free investment strategies; even CDs have their drawbacks. But it is widely regarded as the safest of plays for income generation.

uf
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