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Technology Stocks : JDS Uniphase (JDSU)
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To: Guy Gordon who wrote (1825)11/7/1999 11:37:00 AM
From: Kayaker  Read Replies (1) of 24042
 
Another strategy would be to sell deep in-the-money covered calls. For example, you could sell the Nov or Dec $150 call for about $50 per share. (Deep calls usually sell for near the difference between the stock price and the strike price.) Then you buy back the call before expiration. The idea here is that you are selling to top of the stock -- you are selling all the stock movement above the strike price. If the stock goes up or down you don't make or lose money.

That looks like an appealing strategy, particularly in a situation where you have a strong feeling that the stock or the overall market is headed for a downturn. Basically, you're sitting on the sidelines without having to sell your shares. It doesn't really appeal to me right now with JDSU though. I suspect we are headed for a downturn (possibly starting tomorrow) but the future looks bright, so I don't have a need to protect the short term. For a different stock that I had less confidence in, I would seriously consider it.
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