Formerly About Applied Materials Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Formerly About Applied Materials

AMAT 256.89

-1.2%

Dec 31 3:59 PM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Claude who wrote (57410)	12/13/2001 3:21:58 PM
From: Sam Citron	Read Replies (1) of 70976

Toad, Excellent questions. Let me try to answer them. Cary's only downside is if he later has buyer's remourse establishing LT positions at prices that he said were at the top of his buy-range (including premium received for the covered call sales). For example, supposing the third Friday of July 2002 rolls around and AMAT is back at the lows of October 2001 (26.59). The covered call write has lowered his effective entry price to 38.5 but his relative is still sitting on nearly a 12 point loss. Selling covered calls helps to lower the downside risk, but does not eliminate it. The only thing that is eliminated is the previous infinite upside potential of a straight long position. I tend to look at covered call writing as I do selling lottery tickets. The lottery buyer is taking a longshot like the out of the money call buyer. He is content to pay what he considers a small price for a more remote chance of making a significant gain. Selling lottery tickets is of course more profitable than buying them. That is one reason I happen to like GTK. Sam

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next