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Politics : Ask Michael Burke
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To: Knighty Tin who wrote (32347)9/9/1998 5:11:00 PM
From: Knighty Tin  Read Replies (1) of 132070
 
To All, Ciena today emphatically carried home the point I've been trying to make for so long about the risks inherent in buy and sell call strategies. Though, in the mid 30s, I saw little risk in a buy and write strategy, I don't recommend using them because the downside is so much greater than the upside. In this case, Ciena punctuated my remarks with an exclamation mark.

True, my strategy of buying calls on both Ciena and Tellabs has also been a flop. However, I limited the maximum loss by purchasing calls instead of holding the stock.

This is certainly not meant as a criticism of any of you who did the buy/write. It is just that when a stock provides a glaring example of why I use certain strategies and avoid others, I like to point it out. the buy and write strategy will work more often than it fails, but the failures are doozies and the winners are kiss your sister.

MB
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