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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: StockHawk who wrote (6182)9/12/1999 8:27:00 AM
From: Jill  Read Replies (3) of 54805
 
Your options play: if you are doing this in a retirement account, theoretically great. (Also, as somebody else posted, you tie up margin collateral and have to be willing--but I don't mind, as you might as well use it for something, and I don't buy on margin) But if you also want to hold onto RMBS (consider for instance how much gorillas like MSFT INTL or prince/kings like DELL made over 5 or 10 years---when DELL was rocking you could've invested $5,000 in 1992 and be a millionaire 5 years later...) or any stock you are bullish on, this particular profit may look small down the line, even though the percentage return is fantastic. And if in a regular brokerage account you'd face tax consequences, which you might not want at that point.

Maybe I'll ask ed to come over and comment on this. When stocks like RMBS or QCOM for instance are so volatile, he has apparently been looking at a trading range and selling puts/covered calls that he sometimes can actually buy back later that day or certainly that week for a big profit. This way you reduce your cost basis continually. On the other hand, you're watching the trading range, selling covered calls when overbought and puts when oversold, only with the intention of making some $. Haven't done it myself but think it's a good strategy for the experienced.

Jill
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