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Biotech / Medical : Sepracor-Looks very promising
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To: Bob Swift who wrote (1923)3/4/1999 11:16:00 PM
From: Jill  Read Replies (1) of 10280
 
Did you ever consider the opposite approach--explained patiently to me by edamo over on Dell thread:

considering high volatility, the premium you can get by selling puts will be good. You sell the put because you don't mind if in the future it is put to you because you want the stock anyway (as you are suggesting by your post). And your price, should it be put to you, would be less than the price of market today (cost of strike price you choose minus premium from put). Meanwhile, if you are confident about the price you sold put at--then take that $ and invest long the common. If it looks pretty likely that in 2000 or 2001, SEPR will be higher, this way you also avoid short term volatility and constant monitoring. And in a sense, although your margin capacity is reduced by this method, if you choose correctly you are getting "free" money to build your portfolio. In essence, you are buildng a portfolio by selling insurance (put to bearish person out there) and buying stocks.

What do you think of this method? It really appeals to me. However it's much easier to contemplate w/ large caps like Dell or Msft, where there are repeated dips but basically strong earnings and fundamentals. A little scarier w/ SEPR
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