Options Message Board - Msg: 12821831

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Strategies & Market Trends : Options

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To: SecularBull who wrote (2579)	2/9/2000 1:53:00 PM
From: edamo	Read Replies (1) of 8096

lof...cree not oversold... should have read "not oversold" which would be consistent with the remainder of the post cree is in an overbought position, nothing magical about determining this, just apply a slow stochastic momentum indicator and you will see it is over the 80 line. apply your logic that you want to own, and are willing to sell a put as you feel or hope the stock will come down below the strike. this is a bit convoluted, as if you believe it will come down , then let it come to you. as it approaches a neutral to oversold bias then you can capture more premium and reduce your cost if assigned below what you would establish if you took the position at an overbought moment. the potential of assignment is secondary in put selling strategy. primary purpose is pure generation of income and establishment of cash flow. returns of 2%(conservative) to 15%(aggressive) per month are possible. the leverage of the position is in the ability to manage the margin capacity, which outright purchase of an option negates. the risk is established as owning the stock below current market...no more, no less.

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