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Strategies & Market Trends : Value Investing
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To: sjemmeri who wrote (12199)3/26/2001 2:12:45 PM
From: Allen Furlan  Read Replies (2) of 78599
 
Steven,what do you think of immunex(imnx) after the recent collapse. FWIW my strategy was to buy 1000 shares and sell 50 vyjal(Jan 2003 60 calls) to establish a position at$6 per share. This gives you 50% downside protection and forces you into a long term hold. If the stock climbs over time you add to position at 100 shares every 5 points. This augments the position on dollar cost averaging basis and virtually eliminates any upside risk. Biggest risk is a whipsaw performance on the stock. This can be moderated by using a larger increment for example 10 points per buy. IMHO the options would be at no more than 10 dollars if the stock does a five fold advance in one year. If so the position would be positive even without augmentation(60-5*10)=10. If stock collapses as the bear market progresses you can close out the position with a significantly less costly loss than buying uncovered shares. I think that imnx will be in the low 20's in two years and if so this is a very good yielding situation.
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