Henry,
sorry you are holding apr 160 c - there is no catalyst in place would bring INTC back to 150 before march expiration. We probably would see low 140 or 138 before we see 150 in April.
Frankly, INTC is fully valued at the range of 125-150 on historical high end p/e range of 14-17 based on 1997 earnings, if you buy the est being above 9. INTC has never been awarded such high valuation before. Now the market has cooled off on INTC's prospects, with AMD/CYRX competitions, PC sales seasonally soft in next 2Q, and how much INTC has to invest in new plants, etc. the visibilities just not there - the days when INTC jumped 8 pts a day, in my opinion, are behind us. Basically, INTC is now back to earth. I am glad we dont have a correction like CSCO, but if INTC just meet the estimate, watch out.
As for $150, I doubt very much you would see it in March.
As for margin requirements, there are CBOE rules as well as individual firms rules, you need to check w/ your broker. Yes, it is risky if you sell naked puts on a stock and it drops 20 pt and the stock got put to you, i.e. CSCC, which subsequently dropped another 15 pt in next several weeks. Hence you need to know what you are doing, and know how much risks are involved, and only sell naked puts on stocks you want to own anyway, and calc what price you are willing to pay for that stock, to determine if you would sell the puts. It can be a trading activity but also an investment strategy. Naked call writing is just like shorting the stock, same principle, except worse, may be, because shorting the stock normally you can sit on for as long as the owner doesn't need his shares back, but for call writing, you have a time element to worry about - but of course, you also are compensated by the time prem you rec'd. Again, you need to know what you are doing, and the risks involved.
Basically you should know the valuation of the stock, the recent price range, where it is deemed fairvalued, overvalued, undervalued, market direction/sentiments, etc. to figure your entry/exit points and time frame.
P.S. you dont buy calls at price peak, you buy puts to bet on the price would go down, and at price bottom, you buy calls if you are bullish. If you bought put instead of call for apr 160, you are well in the money now. |
