Safeguard Scientifics SFE Message Board

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Technology Stocks : Safeguard Scientifics SFE

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To: michael r potter who wrote (2340)	3/17/1999 4:24:00 PM
From: michael r potter	Read Replies (2) of 4467

This is an idea for experts only who fully understand the risks and are willing to take them. Right now one can sell the Apr. 60 call for $3 and the Apr. $50 put for $3. This means that if SFE closes the Apr. expiration [4 wks and 2 days away], between $50 and $60 one keeps the entire premium of $600 per 100 sh. Breakeven is if SFE closes at $44 or $66. Anything in between is profitable. If SFE closes below $50, you can get exercised and have the stock put to you at $50 in which your net cost is $50 minus the $6 premium received. If it blows through the upside, or looks like it is about to, one would be advised to cover fast or have long stock to let go of in which you get out at $60 plus the $6 prem. or $66. Many times when a stock does what SFE has just done it is in a trading range for a while, and a sell put/call strategy is very profitable. The above example allows for a $5 movement either way, and still yields an 11% return above that, or 130% annualized. For sophisticated traders only! You are on your own. Mike

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