The Beano Family -
Chapter- 5
We now look in on the Beano brothers after the tumultuous week for Qcom -
Hey my man, what's happening shouted the excited Bobo as Bebo came thought the knotted doors of Bingo's B B Q. What do you mean and why so jubilant asked the taken back Bebo? Aw man, come on, is the Q going to kick ass or what exploded Bobo? Well I certainly hope so but I am not getting too excited, I was not too impressed with that 8 point retracement off of the high Friday said Bebo. Come on Bebo, didn't you hear the news about Nokia asked the seemingly irritated Bobo? News asked Bebo, are you kidding, those were just rumors and not only that about a third of the rise was in all probability, short covering.
At any rate said Bobo, betcha wish you hadn't covered them Q shares don't ya? Nope, not at all, as a matter of fact, the more I understand Voltaire's philosophy, the more it makes sense, remember what he said " even if one is covered, unless prematurely called out, the covered writer still realizes maybe as much as a third of any rise in the stock " and they would still have their quality of life and reduced stress strategy still in tact, now you talk about a good feeling, that is one good feeling, a win win situation. As a matter of fact Betty and I are looking at buying that dream home that you Barb, Betty and I toured last year, it's on the market and also I expect to pick up that BMW you and I have always dreamed of owning some time in the next few days. Whoa, whoa blurted Bobo, you mean to tell me you are not going to buy your calls back first thing Monday morning? No way little brother, what's this little brother crap asked Bobo really perturbed at this point, well you were born 2 minutes after me teased a now smiling Bebo. What I am telling you Bobo is that like Voltaire says " never buy back unless news is overwhelming " and I have yet to see it. Now don't get me wrong, I do feel that an announcement along the lines of what Ericson did would justify certain temporary changes in strategy. What do you mean temporary and like what? Asked a now totally confused Bobo. Well, I could buy my calls back but I like what Voltaire says about using the House's money and then if the news does not work out, one returns to their quality of life and reduced stress having spent only a portion of one months renewable income. What do you mean, don't you have to buy your calls asked Bobo? Nope, I have been thinking that if the rumors still abound on Monday, and we do not know that they will, I will simply buy 20 contracts of the April 165 calls for about $11,000 and that will give me basically 2,000 shares working for me in the form of options and I'll also get about a third appreciation from my original shares, but the main thing is I still retain the $10,000 in my account that will allow me to change my life. If it works, fine, if not, I will have a tax loss against my gain using the House's money and strike it up to experience but more important, Betty, I and the kids can get on with our newly enriched lives without all the stress and anxiety that I have noticed in you. You seem a little confused Bobo, give me that napkin and I will show you.
1. Monday morning rumors abound and I purchase 20 contracts of the April 165's for about $11,000 because if there is this kind of news that you and people like Malloy anticipate, then the move will be rapid so time is not really a factor.
2. I will not have destroyed my vehicle for the good life because I will still have approximately $10,000 in my account from the April premiums and not only that but can write more next month.
3. Nokia announces along the same lines as Ericson and the stock shoots to $200 per share.
4. Your 1500 shares will now be worth $300,000.
5. My shares even covered will be worth $300,000 less about $70,000 for the calls or a net of $230,000 but my calls I bought with the House's money go to about $48.50 or $97,000, giving me a gain of approximately $327,000.
6. My quality of life and reduced stress strategy is still in place and I am still covered for any down turn and you are not! Another point, I am more than glad to have the return but what I have now discovered about reduced stress and quality of life is worth much more than any gain I might realize, that is just a bonus, I am more than pleased with my new stress free life.
Bobo, let ask you something said Bebo, outside of chasing the wind in respect to the Casino, what is your ambition? Well uh, well uh, well you know, muttered the taken back Bobo, I just want security and maybe a million bucks. Well let me ask you this , what would you do with it if you had a million dollars queried Bebo. I would take it out of the stock market, put it in the bank and live happily ever after. Really the wry Bebo answered. Well how much money do you think you would have to have in the bank at a CD rate of 5 % to make an income of $21,000 per mo., the amount of premium I received for my calls? Uh, uhh I don't know, how much asked the perplexed Bobo? APPROXIMATELY FIVE MILLION DOLLARS retorted Bebo. See ya, I have to meet Betty at the BMW dealer.
We'll see what happens next week.
Voltaire |
