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Non-Tech : The Critical Investing Workshop
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To: pinhi who wrote (29196)8/16/2000 9:18:25 PM
From: techguerrilla  Read Replies (4) of 35685
 
You don't!!!

I call that a "busted vehicle," Pinhi.

Writing calls on a volatile stock to get the higher premiums is a precarious game. If it goes up, you get called out. Granted you get some of the move up with the premium.

If it goes down and you fail to buy back and rewrite ("chasing it down"), you're guaranteed a vehicle that will erode: a "busted vehicle." Keeping the premiums in the account and not ever spending them helps you take that vehicle to the "repair shop" at times.

My take on this is that you have to avoid volatility. It's a balancing act. Get a lower premium and more stability. There's no way in the world I would want to follow the market on a moment by moment basis to guard against the whimsical declines in tech stocks that may erode the value of a cc "vehicle." Boring! God, I hate to be bored.

I am coming to the conclusion that the best cc vehicles are the tech "generals"--INTC, SUNW, ORCL, MSFT, and CSCO. They rarely take serious whacks and the premiums are reasonable. Seriously. How many people have kept their ELON vehicle out of the repair shop.

Frankly, QCOM looks as stable as a rock right now. It might stay at 60 and offer reasonable premiums for the next year. Makes me sick.

The bottom line is that you need to have a decent gauge on the downside. Rose pointing out the 200-day moving average sounds like a damn good idea.

I haven't been hanging around much, even though I like so many of you, because the economic destruction I have encountered by the total dismantling of QCOM's market cap has made me have only a passing intellectual interest in the market at this point.

Nice stopping by.

Just my take,
John
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