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Technology Stocks : Seagate Technology
STX 258.21-1.7%Nov 14 4:00 PM EST
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To: TEXASA&M who wrote (4766)3/12/1998 8:16:00 PM
From: Ray Rueb  Read Replies (1) of 7841
 
RE: rolling up & down with options

I'm more familiar with a concept called "money machine".
step one: sell a put on a stock you'd want to own.
step two: if the stock moves up, put expires worthless, return to step one
step three: Buy the stock at the put's strike.
step four: Sell a call against the stock.
step five: if the stock moves down, call expires worthless, return to step four.
step six: if the stock moves up, lose the stock at the call's strike price, return to step one.

Note: If a stock continually moves down, then you keep lowering your cost in the stock; if the stock continually moves up, then you keep selling puts and keeping the premiums. If the stock remains the same price, then you keep the time premium in the option sold.

This is a very conservative strategy as it really limits your return and your risk.
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