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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Jill who wrote (8677)10/24/1999 10:32:00 AM
From: Uncle Frank  Read Replies (1) of 54805
 
>> be kind to tekboy. I believe that options can be used judiciously

I agree on both counts, Jill. Tekboy is one of our finest contributors, and his prose is a joy to read. My testy post was a knee jerk reaction to being "outed" <g>. While I may walk on the wild side occasionally, I try to limit my recommendations to strategies in which I have experience and confidence. I am a novice in options compared to folks like t2 and edamo, and I am still concerned about the increased risks associated with them, so I try not to trumpet my short term successes on g&k.

>> if you sell put leaps, you are really avoiding all short term volatility

Since I operate out of a sheltered account, I can't write puts, but buying LEAPS calls accomplishes the same thing. Even if I could sell puts, it would seem to be inferior to buying calls from several points of view (provided you are bullish on the underlying common):

Writing puts is a marginable action, so while you are "waiting it out" you are paying interest. Not so with buying calls.

When you write a put, the most you can possibly get in return is the total amount of the premium, but in the case of buying calls, there is no upside limit on your returns.

Frank
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