Formerly About Applied Materials Message Board

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Politics : Formerly About Applied Materials

AMAT 242.41

+5.0%

Nov 25 3:59 PM EST

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To: Tito L. Nisperos Jr. who wrote (37954)	10/7/2000 7:38:11 PM
From: Proud_Infidel	Read Replies (4) of 70976

Tito/All, I received this via email; since I am not one who trades options regularly, I don't think I am in a position to comment. But he(and I) would appreciate hearing what you have to say. BK ****************************************** I have been lurking on the amat thread since 1996 and have gained a tremendous amount of knowledge from the discussions that have taken place. I would like to thank you and all the other posters. I know Tito is the master of the leaps, but i would like to sound you out about this stategy that i have used. When you think you are near a bottom(hopefully soon) sell the furthest out leap put you can. Sell the 130 put for January 2003 for $76 based on Friday's close. Lets assume you sell 10 contracts. Your brokerage account will be credited with $76000 that will be restricted, but you will be credited wirh interest (currently @ 6.125%) . In addition you have to put up eqiuty of 20 % of the underlying value of the stock ($10,800 based on the closing price of amat) plus $800 for each point the stock drops from $54. For each point the stock goes up in value from $54 you can withdraw $800. You can close the position at any time. At the current price there is no premium in the put, but as the price rises premium will come into play. The best case would be if the stock closed at $130 in January 2003. Your profit would be 76,000 plus interest of 10,474 (assuming an interest rate of 6.125%). If the stock closed at $40 you would lose $14,000 which would be the same if you held your stock. I would appreciate your comments. I tried to post this on siliconinvestor, but do not know how to post. Hardingwg@aol.com

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