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Strategies & Market Trends : Value Investing
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To: Paul Senior who wrote (16742)4/6/2003 6:02:21 PM
From: Allen Furlan  Read Replies (2) of 78531
 
Paul, I disagree re short selling. The best opportunities I have found in past several years have been in short oriented positions with which I agree by detailed analysis of company documents. I do not have guts to short but I write many naked way out of the money long term call options and also some long term puts. Just going down some of my long standing 2004 calls short are aes(40),adelq(40),brcd (90),cmrc(25),cnxt(25) ad nauseum. Positions taken when the yahoos were pumping the stocks and analysis would lead one to believe they were terribly wrong. I am conservative and willing to take a very small premium if I can minimize risk. The margin rules allow you to put up only 10% of the underlying and the YTM can therefore be quite reasonable relative to risk. For example last week I wrote quite a few dal 2005 35 calls for .45. My assessment is that dal has almost no chance to reach 35 in 22 months and I expect to earn 45 dollars for 100 dollars in margin. On the flip side I have been writing many puts on low price energy stocks (cpn,aes,rri,ep). The leverage on low priced stocks is excellent. My sales of cpn puts 2.5/2005 have been for 1.50 and margin is now .30. Much more risk(like my hrc 2.5 puts).
Anyhow my two bits.
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