Tidbits Message Board - Msg: 14100878

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To: Clappy who wrote (724)	7/25/2000 7:40:42 AM
From: edamo	Read Replies (1) of 1115

clappy....ditm leap call buys.... "roth" in chapter 33 of "leaps", describes this as "leaps surrogate therapy (dim leaps calls as stock substitute)" this is an effective strategy, in fact if you look at the intc example you give...30 strike, 54 prem, common at 79 you are "buying" the common at about a 30% discount.....this is a very safe way to leverage without using margin borrowing....and it allows you to write covered calls at overbought times.... "cheap" as in dotm does not always equate to "profitable"....as you must hope the stock will surge prior to expectation....the past few years have "spoiled" those who only knew a one way market....just ask those who positioned in qcom otm/dotm leaps in january...."ouch"! good luck...ed a.

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