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Non-Tech : The Critical Investing Workshop
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To: pinhi who wrote (29186)8/16/2000 8:35:15 PM
From: Voltaire  Read Replies (2) of 35685
 
Hi pinhi,

good question. One must understand that we have been through a tremendous correction. You keep writing and writing every month and if you have to roll out to keep from getting called you simply do that by letting time be your weapon of choice in getting your equity back. If not down on your equity just let them call it.

it is certainly OK to buy calls back in order to regain your equity but I would never by back because you feel the stock is going to rise. KG is right, let them call the damn thing.

WHO WOULD HAVE BEEN BETTER OFF IN THIS MARKET, BEBO OR BOBO. Bebo of course because not only did he pick up his $27,000 bucks initially but also has probably average another $10,000 per month in addition for the last four months or an additional $40,000 for a total CC return of $67,000 on his initial investment of $200,000 and therefore a net loss of $40,000 as opposed to BOBO'S $107,000.

Now what I would do at the LOW end of the channel such that QCOM is in now is apply a little margin and increase the return.

BOBO on the other hand simply has a loss of approximately $107,000.

If done right, it is almost the only way to go.

There are three things that killed most people even though they had written calls.

1. Not buying back the calls when all intrinsic value was gone and rewriting.

2. Buying on full margin and therefore exacerbating the above.

3. Buying their calls back because they thought they were about to lose an opportunity.

CAN'T BE BEAT IF DONE CORRECTLY. Only reason I quit posting about Beano's was because I could not get the above three critical areas over to most.

V
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