Formerly About Applied Materials Message Board

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Politics : Formerly About Applied Materials

AMAT 223.31

-3.2%

Nov 13 3:59 PM EST

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To: Cary Salsberg who wrote (43043)	3/5/2001 9:59:45 PM
From: Sam Citron	Read Replies (2) of 70976

Cary, Call me an optimist but at the targets you have indicated of between 20% and 33% off from today's levels, I think you will be lucky to complete even your first tranche of purchases on average. If so, you will do just fine on your current holdings but may end up holding more cash than you need or you may end up having to chase them on the way up. This is the reinvestment risk. We have previously discussed the benefits of selling naked LEAP puts for stocks that you are happy to accumulate at preset levels. You could sell puts at strikes approximating your targets plus the premium you would receive. I would think that this should be roughly equivalent to what you are proposing except that if the stock rises and you miss your target, at least you still get to keep the premium you have received. Thus it should be more efficient than your plan. I would be interested in hearing your critique of such an approach. Sam

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