CMGI What is the latest news on this stock? Message Board

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Technology Stocks : CMGI What is the latest news on this stock?

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To: kcmike who wrote (8147)	5/12/1999 12:19:00 PM
From: PAL	Read Replies (3) of 19700

kcmike: For illustration purposes, let us set the scenario as follows: buy 100 shares of CMGI at $ 218. Sell 1 naked put Jan01/220 $ 91 Sell 1 covered call Jan01/300 (not at this price yet) $ 127 Cost basis: 100 sahres at $ 0. On January 2001 : do a strangle : CMGI > 300 : Get $ 300/share cost basis zero. 220 < CMGI < 300 : still own 100 sh CMGI cost basis zero, repeat selling naked put and covered call. CMGI < 220 : own 200 shares of CMGI, cost basis $ 110/sahre 110 < CMGI < 220, own 200 shares cost basis still lower than market 0 < CMGI < 110; own 200 shares, paper loss. CMGI = 0 lose $ 22,000. On January 2001 : buy and hold CMGI > 300, can get more than $ 300/sh with investment of $ 218 0 < CMGI < 218 own 100 sahres paper loss CMGI = 0 lose $ 21,800. Yes, there are stringent margin requirement for naked put: a. minimum net worth & equity. b. 20 to 30% (depending on the broker) of the underlying price plus option premium minus OTM amount) c. minimum for OTM requirement. Please check if CMGI is marginable as well. If not, none of the equity in CMGI can be used for covering the margin. Good Luck in your investment. Paul

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