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Politics : Formerly About Applied Materials

AMAT 228.68

+1.2%

Nov 17 3:59 PM EST

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To: Jacob Snyder who wrote (42972)	3/3/2001 9:22:36 AM
From: Jerome	Read Replies (2) of 70976

Jacob/Gottfried An awful lot of postings about entering AMAT at the right price or at the right time. In both situations a lot of brain cells are being used up. Keep in mind that neither brain cells or liver cells are replaceable. And at our age that's something to be concerned about. Jacob mentioned a few days ago about doing something crazy and wild with some extra cash. Here's an idea for the next twelve months with AMAT. On the Monday following options expiration buy 100 AMAT as close to an option strike as possible and write the covered call and net $400.00 if possible. (easy if AMAT is at 45, more difficult if its at 35.00) After the option is filled place an order to undo the option (called buy call to close) at a limit of 1 (good till cancelled) If this option gets filled immediately write another covered call for the same month at the new lower strike. This may or may not happen depending on the price movement. Concerning AMAT. If you buy AMAT each month on the Monday following options expiration and write a covered call immediately, You will have gathered in about $4800.00 in premium during the year. This assumes that you will be called out each month. And that is a very unlikely outcome. Mathematically if you write a covered call for $400.00 profit and then undo it for $100.00 and then write it again at a lower strike your profits will increase by 30 to 60%, over the course of the year. A real life example. Two months back I bought 500 ATML at 16 3/8 and immediately wrote the 17 1/2's In the course of the next 6 weeks I have written the 17 1/2's, the 15's and the 12 1/2's. Each time I got at least 1 point for the option and undid the option at a price of 1/8. Some would say never undo an option, but if you can sell sell something for X number of dollors and then reclaim it for 1/8 of the purchase price do it. The trading range volatility that we are seeing today is your friend.This will not always work, but its worth a try. Many seem to think that AMAT will suddenly shoot from 45 to 90 in the course of a month. It would be nice if this happened but as long as it stays in the trading range take advantage of it. Jerome

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