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Politics : Formerly About Advanced Micro Devices

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To: James Yu who wrote (4813)1/29/1997 12:58:00 AM
From: AK2004   of 1572208
 
James
you may use short sales even if you are bullish on the stock. Say you have a substantial cash on your hands but you are not willing to risk it. One strategy is to sell the stock short and to buy twice as many calls that are out of the money. This way you are earning interest on your cash plus sale price and at the maturity you can either sell the calls and use half of them to cover your short position and the rest is yours or in case of downturn you have a gain on your short position. The only way you loose if the stock stays at the same price which we know is unlikely after k6 is out.
Regards
-Albert
ps there is more than one way to skin a cat
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