Ampex Corp: Digital Storage Message Board

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Technology Stocks : Ampex Corp: Digital Storage

AMPX 7.905

-0.2%

3:27 PM EST

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To: David McDonough who wrote (2209)	3/9/1997 7:03:00 PM
From: Merlin	of 3256

David, Thanks for the response. I am selling naked puts. I have the impression that there is a large upside potential for AXC, but that an explosive rise is not imminent. If the stock is still in the neighborhood of 7 1/2 in October, I can use the premium from the put to buy the stock at an effective price of 5 3/4. If the stock is over 9 1/4 at expiration, I would be better off buying the stock now instead of selling puts, but if the stock truly has a long way to go, I could still buy in. I would only sell covered calls. At 35% margin of the stock value and a premium of 1 3/4 to 2, I would get a reasonable return on the money tied up even if I missed the boat on a big rise. Normally writing naked puts has a significant downside risk, but with AXC trading so low, this is minimized.

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