Why make a strong position in DELL right now?
Mike, ordinarily, this would be a lot easier to answer. However, right NOW, sufficient turmoil in the world economic situation exists to make the answer more problematical.
Will DELL do well? Yes.
Will DELL increase market share? Yes.
Will DELL increase unit sales? Yes.
Will DELL increase revenues? Yes.
Will DELL shorten its inventory cycle? Yes.
Will DELL's stock price go up if the DOW goes down 300, 500 or 1,000 points? Unlikely.
Will the market go down 300, 500, or 1,000 points? Wish I knew the answer.
So right now, if you are looking to buy DELL, AND have the appropriate brokerage permissions, this is what I'd do.
a) if you think the market will move up, buy now. 1/2 equities, and 1/2 leaps.
b) if you think the market will stay roughly flat, decide how much DELL you would buy, then sell at-the-money OCT puts equal to 1/2 that amount of shares. Buy LEAPs with the other half, some now, and some in 2/3 weeks.
c) if you think the market is likely to go sharply down, sell out-of-the-money OCT puts for 1/2 your intended position; buy LEAPs on the other half when you think the market is due to turn around.
JMHO. 3. |
