NorthPoint Communications Holdings, Inc. (NPNT) Message Board

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Technology Stocks : NorthPoint Communications Holdings, Inc. (NPNT)

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To: ahhaha who wrote (326)	11/19/1999 8:35:00 AM
From: Panita	Read Replies (1) of 786

Ahhaha let me see if I can make it clearer. For those considering selling their stock outright I am recommending writing covered calls instead. Let's say it January 18, 2000 and NPNT is trading at $90 you bought NPNT in early Nov at $30 you have a $60 gain unrealized. You go to option chain and see the March $60 is trading at $33 (30 diff bet $90 and strike price of $60 + $3 for premium) You have 1000 shares you write 10 contract. The next day you get $33,000 in you account minus comm of $100(varies by broker). You can take the money and do what ever you want with it (buy more shares on NPNT, put in a mutual fund whatever). If stock goes up you get called which means that you sold at $93 (Remember you get $60 x 1000 or $60,000 for the stock you wrote plus you already got the premium of $33 x 10 x 100 or $33,000 when you wrote the calls) You have $93,000 minus comm. In the other scenario stock is at $90 you sold and you get $90,000. If you're are thinking of selling any ways you got more $$ on the first scenario. Remember that if there is a retracement then the option expire worthless (the stock closes below $93 by the third Friday in March; you keep the shares + the premium ($33,000) you received for selling them. For NPNT the game has not started and it will be a great stock for the next few years. But no stock goes straight up. I bet those who sold AOL in the summer of 1997 wished they wrote calls. If you are not a long term holder then just sell get your profits and get out. Or just hold and do nothing. That is a choice each one of us makes. All I gave in my post is a strategy that may be good for some people (specially if your well in the money imho). If the strategy is not good for you or others that is your call. But hedging has its place in the market. Just because you don't like it is not bad for everyone else. We here to share on NPNT investment ideas. Have a super day! By the way are you from Philly or the NorthEast?

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