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Technology Stocks : Winstar Comm. (WCII)
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To: Brian Coakley who wrote (9344)11/17/1998 3:24:00 PM
From: Night Writer  Read Replies (1) of 12468
 
IMHO This is a covered call play. You sell covered calls to finance the purchase of putts to protect your position. This gives you a number of options. If the stock dips between now and April, you can close call position at a lower price. The idea is to make enough profit to finance the putts. At that point, you own the putts for free. Then, If the stock goes up you make money on the stock while the putt options expire worthless. If the stock goes down, you sell the putts for a profit off setting loses on the stock. You don't lose money on the stock, and reduce your cost basis. This is a sophisticated options play. The only way to lose is if the stock goes up and stays up. Timing is important if you want to keep the stock. This is a great options play by someone with a lot of intestinal fortitude.
NW
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