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Strategies & Market Trends : Stock Attack -- A Complete Analysis

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To: Chris who wrote (39243)	12/25/2000 2:03:11 PM
From: Lee Lichterman III	Read Replies (3) of 42787

Simple question that has no simple answer. Wow, Of course there is the obvious disadvantage of a market down turn. There would also be the disadvantage of the index under performing a well chosen fund that rotated into the faster moving stocks since rotation seems to be the name of the game the last couple years. Of course these negatives could be countered somewhat by a well planned and executed options strategy such as selling covered calls against the positions as long as the strikes were well placed and timed. That could provide the extra income to counter lags and take out some of the downside as long as we don't drop too much further. I was considering a strategy such as this myself. As long as you sell out of the money calls and stay out an extra month or so, you could probably come out OK even if you found yourself deep in the money since the premium erosion would allow you to buy them back as intrinsic value replaced IV. Allocation will also be a big factor. I personally think the DOW is going to get clipped soon and am favoring moving back towards tech myself but who knows for sure? Good Luck, Lee

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