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Technology Stocks : Dell Technologies Inc.

DELL 133.20

+5.7%

Nov 26 3:59 PM EST

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To: finfan who wrote (77023)	11/8/1998 10:34:00 AM
From: JBird77777	Read Replies (1) of 176387

Investors who believe in Dell and like leverage through margin should consider selling long term out of the money covered calls (leaps) such as the Jan. 2001 90's (ZDEAR), and investing twice the proceeds (using margin) to buy more Dell stock. This process can be repeated several times, as more Dell stock is bought and corresponding covered calls sold. For example, assume that you own 100 shares of Dell, including 50 through margin. Sell 1 ZDEAR contract for about $1700 and buy $3400 / $65 = 52 shares of Dell. Assume Dell appreciates $5. Then the 52 shares of Dell appreciate 52 x $5 = $260. The contract will appreciate about 100 x $1.34 = $134; this is a loss of $134 to you. The net gain is $260 - $134 = $126. In effect, you will have a net gain of about half of the gross gain of the new Dell shares that you buy, and you will have invested no additional personal capital. You will have increased your overall net Dell return by about 25%. (These figures would be adjusted insignificantly over time due to commissions (using a deep discount broker), interest, and reduced time value of the leap contract.) JB

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