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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host
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To: Trebor who wrote (3582)2/22/1998 11:03:00 PM
From: Mark Pritikin  Read Replies (2) of 42834
 
<<For my part, I'm sticking to my strategy of holding Intel long term. When it gets to what I consider overvalued, I sell covered calls against part of my holding. When it dips to what looks like a buy
point, I either buy back those calls or let them expire worthless. I've never heard Bob discuss this strategy in any detail but it has worked very well for me>>

Of course, the risk to this strategy is that you sell covered calls
and the price continues moving up and your stock is called away and your out forever! This can happen when you look at the PE and think its too high, but then INTC pre-announces better then expected earnings (or has a blow out qtr) and suddenly the valuation is not out of line. Seen this happen a few times before and for that reason, do not play games with covered calls. Some who do, choose to go way out of the money (Jan 99, 120's to minimize the risk of losing the stock on a big short term move up).

Good luck!
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