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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: freeus who wrote (132067)	6/9/1999 1:18:00 PM
From: edamo	Read Replies (1) \| Respond to of 176387

freeus...ot ot options.. if i said sell ditm calls, my mistake, the intent is to buy ditm calls...when a stock is "oversold", it is to your advantage to either, go long the common, buy a call(best ditm leap for me, use as stock replacement), sell a put...or a combination of same....why, because you believe the stock will recover, and advance in price to make your position profitable...as underlying increases, long call goes up, short put goes down.... don't understand the problem that most brokerage firms have with put selling...let's say i have 1000 shares of dell, unencumbered, i can sell 10 dell put contracts, using my long as capacity against margin...the premium if left in cash actually increases my capacity, as the common advances...and similar if the premium is reinvested in an appreciating asset..most "real" brokerages will allow you to sell puts with 100k available cash or margin capacity... lets say you have 100k cash, i say cash....sell 10 aol july 95 puts, get about 450/contract x 10=4500, this is conservative, if aol tumbles while you are in a deep sleep, you own it at 95-4.5=90.5, better than buying today at 110...do this month after month and in this instance you will return +40%, and be in cash....not worrying about your long holdings dropping and margin calls.....with the market off substantially and my long positions down about 40%, i still have capacity to sell puts...no questions asked by the brokerage.... buy a dell 0122.5 call, pay a 16 premium, dell at 35, your cost 38.5, about a 10% prem to market, but you are controlling a position for 16, less than half the long cost....the ditm will mimic the long point for point, up or down...and you have sufficient time to recover...you can write covered calls against your long call, does everything the stock does, low risk....stock replacement