Hawk; I won't give any advise, you know your risk level, and all
that..but before I'd sell I would look at a way to "unwind" with
out a big loss. One way I see to unwind if your at say below a 33 average, is to sell covered calls, Jan00 26 last sale was $7 ..if you got that $7 and she was called from you latter at 26..you are out at
33..less commissions..you miss any upside but it unwinds you ,
it's better than selling at this price.
If the price goes down from here you can buy thoes calls back
cheaper, so that more downside is at least limited, thing is
you just about give up on making a profit, and the stock sits
there till you buy caals back or it's called from you. To me that
would beat taking the loss by selling now, if I were concerned
about it.
----------------------
AS it is I'm long my first buy was 27-7/8 and then yesterday
at 24-9/16, then today I bought Jan99 16calls @9-5/8, so I'm
to bullish at this point to worry with selling calls.
Yet I could do just what I told you, and I would have a
profit just about locked in, but a smaller one than I'm
looking for. It would give me some cash, but also tie up
my stock till 2000..unless I bought the calls back, which if
she goes up would cost more than I sold them for.
My average is about 26..so If I sold calls for $7 it's like
a 26% profit for tieing up the $ 26 for most 2 years..lets
see 26-7 means I'd have 19 actally tied up in the stock..
that they could call for 26..that looks a little better,
damm I might talk myself into this..in as much
as I've already got some calls bought at 16..
To lose the stock would have to be below 19 by 2000..
if it goes down that much I could buy calls back and sell more
at a lower strike..one more time...19 tied up for $7 profit
if it gets called..=36% for the duration..that's more than
my bonds are paying, and hasn't a lot of down side that I can't
deal with..my calls cost 9-5/8 but let me call at 16..but
thats just till 99..so up to then any way while it can get
called from me at 26..I can call it at ( 25-5/8 ) with the
premium included..I think that is some kind of hedge.
-------------------
then my sold calls help pay for my bought ones making them to
the tune of costing me 2-5/8 ...but giving me the privlidge
of calling at 16.. I'm thinking out loud here and just
stumbling along but this is sounding to good for me to belive,
I'l have to study on it some more If my sold calls at
7 off set my bought ones at 9-5/8, thats 2-5/8, I sold
the calls at a strike that unwinds me at my cost, so putting
no profit into the stock I bought and have to hold..till 2000
I still get to call at any time stock at $16 like I could
call that tomorrow..at the net cost of 2-5/8 + 16 plus
commisions..dump it right back at 24 ..roughly 5-1/4 profit,
but that don't make sence to use up my $7 to get 5-1/4..
no I have to wait till it goes up to about 26 to break even on
that deal..but if it does that by jan99..I'm ahead..
yet without all that if it goes to 26 by Jan 99 I'm still
ahead a littel on the calls..and even on the stock and save
the commissions.. I guess I won't do any thing except I just
might sell thoes calls..just in case she don't go up I'll be
hedged i think to were my bought calls lose value but only cost
so if they drop to 5 then the stock is likely 20..
yet the calls I sold can be bought back cheaper at that point..
sort of like a seasaw..and i got 19 in the stock,
but if she takes off..well my profit
is limited to what I have calls on and and the 36% made
via selling the covered ones..gezzz this is getting
to confusing for me I better give it a break..<G>
Jim
P.S.
The advantage or edge appears to be writing the out of money calls,
but buying in the money ones. Still i need to look it it more..
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