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Technology Stocks : LSI Corporation

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To: Andy M. who wrote (25622)	6/17/2003 8:43:12 PM
From: E_K_S	Read Replies (2) of 25814

Hi Andy - On CNBC a few days back the guy from investor's intelligence was on. He is the one who discusses the insider Buy's and Sell's. He stated that Gregorio Reyes a Director bought $25K shares at $6.24/share bringing his total ownership to 35K shares. This would be the 2nd insider buy who paid "full" market price with CEO Corrigan's purchases earlier this year (2/2002). Also Joseph Zelayeta optioned 40K shares (2/2003) at an option exercise price of $2.75. I was a bit early buying in the 7's on the way down but swapped those shares out (after waiting 31 days) and got several more in the 4's. I also hedged the trade a bit by writing a straddle on the July 5's. You sell covered calls on a portion of the new shares purchased below 5 and at the same time write a naked put for shares in the same amount. I was able to net $1.50/share (Put premium plus call premium) to create some short term income. So far, I left over a $1.00/share on the table by writing the covered call but did reduce my overall risk for the trade. Hopefully, the next leg in the up cycle will begin soon (probably next year) and this time will last for 18-24 months. I doubt the earnings will reach the peak levels we saw in the last up cycle but they should be at least 50% of the previous amounts. ALTR, XLYNX and LSCC are beginning to move (FPGA group) too. LSI's chips are still being designed into new enterprise storage products. BRCD recently announced LSI components in their new fibre switches. Therefore, I am pretty optimistic that LSI will generate some excellent free flow cash flow in this next cycle. I continue to hold my positions and collect my option premiums while I wait. If July passes and the stock remains above $5, I will write the naked Puts again on any sell off below $5. EKS

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