Formerly About Applied Materials Message Board

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Politics : Formerly About Applied Materials

AMAT 261.90

+0.4%

Dec 26 9:30 AM EST

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To: Tito L. Nisperos Jr. who wrote (13523)	12/17/1997 11:26:00 PM
From: Amir Desai	Read Replies (3) of 70976

That's true but there is an interesting way to take advantage of LEAPS while buying stock on margin. For example, I bought 2000 shares of AMAT @ $26.125 with only $25,000. I immediately wrote the JAN 99 35's for $5.125. This immediately took my account value up to $35,000. The best part is that now I get to keep all the difference between the $35 strike and my purchase price of $26.125. About 9 bucks or $18,000. So, if AMAT hits at least $35 by the end of next year or higher, I turned my $25,000 account into $53,000. You gotta love 100+ returns in a year. If AMAT goes no-where for a year, I keep all the leap premium for free. AND if AMAT goes down, I have about a 4,5 point free cushion. My guess is that AMAT goess well above $45 by the end of 3rd qtr in 98 and that the premium in the LEAP by then will evaporate to $2 to $3. I probab;y end up buying it back. Good luck to all, Amir

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