SI
SI
discoversearch

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 : LEGATO SYSTEMS LGTO
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: A. Wayne who wrote (844)2/14/2000 12:47:00 PM
From: Chuzzlewit   of 1138
 
Wayne,

Do you do it mainly to protect a position or because of the leverage it gives you?

It depends on the situation. Occasionally you see a short-term, unsustainable price pop because of pre-earnings run-ups, so writing a call against your existing position is a nice way to add a few dollars to your portfolio. In other cases the high volatility of a stock might present a nice short-term gain mainly through taking advantage of the time value of the option, and so in this case you might do it for the leverage. Finally, selling far out of the money calls against your position can be a nice source of extra income.

I use a variant of covered calls to enter a position -- selling in the money naked puts. That allows me to take advantage of an increase in price of the stock (up to the striking price), or, if the striking price is not reached, to enter the position at a nice price. For example, when I sold LGTO Mar 30s for $7. So, if LGTO closes under $30 and the stock is put to me I will have bought the stock for $23 ($30 - $7).

TTFN,
CTC
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News