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Strategies & Market Trends : The New Millenium Portfolio
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To: John Pitera who wrote (11)1/15/2000 2:07:00 PM
From: HG  Read Replies (1) of 540
 
John,

How about a covered call straddle on the volatile stock of the month...

The idea is not to try and time the market, just letting one option expire wothless. Illustrating my point with 1 option.

Buy 100 shares when the stock has presumably at a low. Sell 1 put. Sell 1 call when the stock has rallied some.

The only trading which needs to be done is with 100 shares...we can choose to go long and short the 100 shares to add "more" profit dollars depending on the strike price of the calls and puts.....or we may just wait it out for a more passive investment strategy...

The strategy assumes that one option will expire worthless, and the other will be significantly profitable, that the puts will be partly funded by the proceeds from the call (or vice versa should you decide to implement the strategy by buying calls and puts rather than selling) thus reducing the initial investment amount and providing greater return on investment.....and one can ride the volatility without any significant concern...

Put in some numbers there from stocks like CMGI, CMRC or YHOO and you can see we can make approx 1000% on our initial investment in a year - without any sweat, regardles of market direction, with almost nil downside risk....
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