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Technology Stocks : Broadcom (BRCM) -- Ignore unavailable to you. Want to Upgrade?

To: Brian Malloy who wrote (2148)	7/1/1999 12:52:00 AM
From: Farfel	Read Replies (1) \| Respond to of 6531

Good luck and say goodbye to your BRCM stock. If you really are afraid of the summer time; sell your stock and take profits. No need to "squeeze" profit out of a stock which has realized a 600% price increase in the last 10 months. And with CMGI you might try that only to find that the meager "premium you receive" isn't worth the price/loss you experience when your stock plummets to 170 from its high of A good friend of mine now sits with 4,000 shares of 3Com which he bought in the mid 40's hoping for a recovery as he had to ride it down to 20 and now has sat at 26 for the last several months hoping to recover. What did he get----the meager premium; what did he lose---figure the math, 20 times 4000=80,000 ---was it smart for him to "sell calls" ----you guys seem to forget that if the underlying issue starts to plummet, you either "eat the loss" or buy back the calls at a much higher premium than you originally paid. Many people don't buy them back, they keep thinking the stock will turn----how would you like to get caught in a gap like he did and keep waiting for the turn, but no turn came and now he is sitting on "dead money" for his pittance of a premium. Understand one thing-------you can lose all the value of the stock by writing a covered call, and lose your behind if you write naked calls. Everyone thinks that this is the conservative strategy; I don't and neither does O'Neill from IBD---the reward is small and the risk great because the premium isn't that much unless you are sittin on an explosive stock---and if you are, why would you ever sacrifice the upward potential for such a small reward. Honestly, who here who has owned BRCM even through 1 earnings report would ever want their stock to be "called away" from them for such a premium----keep in mind I bought into the 60 calls back in FEB---my 1400 must have looked good to someone then----now the stock has advanced 84 points----would you really want that to happen to you. Even "dead periods" with BRCM (like the one which lasted between the last earnings report and several weeks ago---which caused my good friend and me to sell our stock at 69, will lead to great moments of regret to those who sell. The difference between him and me is that when I sell a stock like BRCM I will buy calls to cover the position "just in case" ----my friend is moaning on the phone today; I was cheering with a pint of Guinness in the hand. Good luck BRCM longs------if you really fear the end of the summer sell your stock and buy some November calls on BRCM----your downside risk is limited and that way you will be sure to include the October earnings report-----I doubt you will lose any money and you will cut down your risk considerably, especially if the stock dives mid summer and you are on margin.