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Non-Tech : The Critical Investing Workshop

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To: she_x who wrote (9173)	3/25/2000 1:59:00 AM
From: lurqer	Read Replies (1) of 35685

Lots of questions and I have so few answers. First paragraph: only owned to use, correct? That's my understanding of "clasic" Beano. Reduce stress is the motive. Second paragraph:write calls on the old gorilla at the money, right after expiration to get a good premium One could do this. There are an infinite (or at least almost infinite <gg>) number of market games that if played skillfully can be profitable. I don't play any true option games where one plays one part of the option series against another part or against the underlying. I simply play the underlying security and use options for leverage. That requires having some knowledge how that stock behaves. When you say "old gorilla" that doesn't work. CSCO is different from MSFT and both are different from INTC. CPQ, which you mentioned is different still and not a gorilla. Take pre-DOJ MSFT as an example. Every quarter same ole song: Well we did OK this quarter but everything looks bleak going forward. This "lowballing" tended to depress the stock. Upon occasion other (usually transitory) factors (news, market fluctuation, etc.) would also depress the stock. If MSFT became very depressed I would sell ITM puts. After all that's what Softie would do and if its good enough for them ... Note on MSFT I'm not selling calls because given the way MSFT "managed" their stock it was already depressed. So in this case puts were the play. CSCO is in many ways the opposite. In lieu of an R&D department, CSCO uses their stock to buy small innovative startups. Hence, they "manage" their stock to have the maximum value. When it becomes overextended (IMO) then I'll sell calls. I don't know but suspect that CPQ is more like INTC where you have to watch how the Houses are playing it. Moreover I don't play every month, only when the opportunity presents itself. Third paragraph: I didn't understand this paragraph. How is margin related to basis? Fourth paragraph:what's my motivation for using options? Well I certainly agree you should carefully examine what your motivation(s) is(are). Not working, some of my motivation is "pay the bills". The primary motivation for me is to acquire the funds to build the LTB&H portfolio I want. Given the place we are in the business cycle and the Feds stated policy, I think 2000 is the year to build the LTB&H portfolio that will "carry" you for the next cycle. For that I need bucks. Fifth paragraph:i don't know. did i understand you correctly? Hopefully this post helped. Remember I'm still learning too. lurking... lurqer

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