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Strategies & Market Trends : Advanced Option Strategies

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To: grenouille who wrote (25)	7/18/1998 11:59:00 AM
From: Joe Waynick	Read Replies (2) of 355

Robert, no Systematic Writing this month! CSCO closed at 99.75 on Friday. So I keep $725 - a 11.85% two week return. Meanwhile, on Monday, 07/13 I noticed that CSCO dipped to 92.375! So on the 14th I sold 3 August 95 puts at 4.50, for another $1,350 into my account. That will give me a 5-week return of 15.79%. Altogether, that means a $1,925 6-week profit on CSCO for a combined return of 26.61% on the same money after commissions and margin interest. That's also an annualized return of about 260%! Be prepared to take a double position in the stk if assigned because you'll use Systematic Writing in case the stk is below the strike on expiration day. Remember, only do this with fundamentally sound stks. Ones on which you're solidly bullish and expect to go UP, but don't mind owning if they take a temporary dip. They don't have to be shooting stars, just steady eddies. You can generate good cash flow.

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