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Technology Stocks : Dell Technologies Inc.

DELL 133.20

+5.7%

3:59 PM EST

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To: BGR who wrote (117548)	4/14/1999 6:08:00 PM
From: Michael Bakunin	Read Replies (2) of 176387

I think that my cherry-picked example of Komatsu is instructive. The chart of KMTUY is almost a mirror image of Dell's: down, down, down since 1989. Let us say that the put seller has managed to identify that implied vols are twice what actual vols will be, but is wrong about the long-term trend. While he collects usurious premiums, his mistake about the long-term trend is going to cost him. Even if he limits his put-selling to an amount he can cover with cash, this income-generating exercise would have lost him over 80% of that cash over the last ten years. Triple vols drop you a mere two-thirds or so. When Ed applied this extremely bullish, highly risky technique to Dell over the past few years, it may have felt risk-free -- but it wasn't. -bakunin

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