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Politics : Formerly About Advanced Micro Devices

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To: Epinephrine who wrote (95020)	2/24/2000 6:47:00 PM
From: kash johal	Read Replies (3) of 1574258

Epinephrine, re: Message #95020 from Epinephrine at Feb 24 2000 5:47PM RE: <But $53 a share is not such a bad exit <VBG>.> Kash, I agree and I have been seriously considering writing covered calls against a larger portion of my position in AMD. (to about half) Then if they were exercised I could invest in other areas with the cash from the sale (or freed up margin actually) I would then sell covered calls on the rest of my AMD position and if AMD didn't rise I would keep the premium (and the shares) and if it did then I would use the profit from the previous call's exercise to buy AMD shares to offset the calls I had currently. That way I would maintain a kind of rolling position in AMD that would still generate profit even if AMD stalls for a while. The only thing that keeps me from doing this is all the good news that has been coming out and the potential for a runup into quarterly results. But it seems that such a strategy would: - reduce my risk of being so concentrated in AMD (Currenty 50% margin) - maintain an investment in AMD in case it does take off - generate immediate income from the covered call sales - give myself some flexibility to pursue other opportunities in the market - keep some dry powder in case AMD tanks for any reason at which point I could buy in at that lower value. I may forgo some upside by going with this strategy but I really feel like it might be time for me to be a little more conservative rather than risking the entirety of my life savings on a daily basis. Additionally I don't know if I really would be necessarily missing upside since I could have actually made quite a bit of profit buying in when AMD swung down in the past but couldn't because I had no dry powder. (it was all already in AMD) What do you think of this strategy?." I personally like writing covered calls as a risk management strategy. I sold some AMDGI's at 8 5/8, 8 1/4, 7 1/2 and last batch at 6 3/4(today) over past week. It is also a pretty good trading strategy. These calls could run down to $4-5 over next month or so. At that point I'll buy em back or just buy some out of the money calls with the premium decline. If the stock runs up to $50 plus thats OK as the covered calls provide a nice cushion and at that point i would buy some apr 60 calls. I currently expect the stock to trade in the $35 to $50 range until mid march. I suspect earnings will be awesome and so April calls will be profitable. But the whole world has figured this out and call premiums are very high right now so I am going to wait to buy. Welcome other folks views on risk management in a choppy market. regards, Kash

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