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Strategies & Market Trends : WR's Momentum Trades
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To: Susie924 who wrote (8608)10/26/2000 9:16:54 PM
From: Wayne Rumball  Read Replies (2) of 11130
 
Think options Susie.

If you want to hold this stock for years, write options against your position. Jan 93.75 calls, someone will give you 6 3/8 for writing the call. If the stock goes up, that premium will erode, you buy it back and write a $100 call.

If the stock goes down to 83, you buy it back for $2 and write 83.75's for $6 3/8

Look here;
amex.com

All the Jan calls that are in the money people are willing to pay the equivalent of $96 for the stock.

Look at the out of the money calls. 93.375's they'll pay 100, 105's they are willing to pay 107 7/16.

My strategy has been to write near the money calls (like the 93.375's) and switch around when they become in the money, or use the high premium to lower my risk level. It also gives you cash to buy something else (Say like more of the same stock)

Some people just like to write way out of the money calls so that they never have to worry about being called and just collect the extra cash
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