Qualcomm Incorporated (QCOM) Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 170.90

-1.3%

Nov 7 9:30 AM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: 100cfm who wrote (48370)	11/7/1999 6:38:00 PM
From: Thomas Tam	Read Replies (2) of 152472

My opinion regarding selling the covered calls is that you only truly protect a portion of your portfolio. Say at the time that Q was trading at 220, when Voltaire may the trade. He sold Nov 220 calls, for say $22 (can anyone remember this?). If Q tanked on the earnings, and dropped 30% (to 154) yes he would preserve some of his portfolio, but no one would have exercised his calls and his portfolio still drops by 30% but added the funds from the covered calls and the damage is not as bad (154 versus 176). That's still a drop of 20%, not truly protected as you would think even with a 3 million portfolio or any size. The unfortunate part for Voltaire was that they exceeded numbers and announced things were favorable for the industry and will continue to make money and then add a split and bang we're off to the races. He limited his upside to $242, by not buying his covered calls, on what was supposed to be an insurance policy initially. As QCOM continued to ramp, the calls got more expensive and while the Q was going up his portfolio was not. If things remained the status quo or between $198 and $242, then Voltaire would look better than the rest of us. If you worry about a catastrophic reaction then the simple put buy would have been better. If you use covered call as an insurance policy for a bad event, just make sure to cancel it when the coast is clear. Many ways to skin a cat, as we can tell on this thread. Look forward to the HDR demo which could add additional fuel to this fire. later

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next