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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: Jean M. Gauthier who wrote (26535)	7/18/1999 11:10:00 AM
From: Tom Buttram	Read Replies (2) \| Respond to of 74651

Just how much msft stock does a person need to retire?Assuming you need 50k per year to live on and assuming you never want to sell your principle shares.Lets assume you have 5000 shares today($500,000.)Would it be prudent to use options for income?Sell slightly out of the money puts when msft is an obvious buy(76-80 recently).If assigned thats ok, just wait for a rebound and then sell covered calls.And when msft gets overbougt sell short term out of the money covered calls on a portion of your priciple shares.I know cc can be hazardous if the stock continues upward but you can always cover and roll up .I think this is called a strangle in options.I just did this with intc recently sold atm oct 55 put,sold otm aug 75 call and so far workind great.Received nice premiums on both ends and probably will not be called or assigned.It makes sense to put to work such a large principle amount(msft stock) to derive income.Thanks for all the good discusion lately. Tom ps also assume you can use 10% margin to buy msft if needed

To: Jean M. Gauthier who wrote (26535)	7/18/1999 1:46:00 PM
From: ed	Respond to of 74651

Buy the far out of money call with the max time, the time value will accelerate fast before the stock price hit the target price. when the stock price hit the target price , the time value is about $1 per month for the rest of time remained. About one year before the expiration , the time value begins to reduce faster, and 6 moth before the expiration , there is almost no time value. If you do some study, you will find that there is almost no time value for deep in money leap which will expire in 2000. So, if you want to buy stock, you may buy those deep in money leaps which will expire in the next six months, you pay no premium , and you do not have to pay the full amount now , but the rest at the end of expiration, which is six months away. You have to set up your own strategy and be patient . To reduce the impact of tax, you should exercise the option , and have the stock delivered , which will appreciate with you for the rest of your life, the long term appreciation. People try to maxmize the cash, profit, you should think different way, that is , to maxmize your holdings of the stock, when the price hit all time high, your profit is maxmized automatically, so just forget to time the market , but thinking about maxmize your holding all the time. The high tax rate actually hur people, and jerpardize the retire plan of every American. You can start with 100 shares every year, i.e just buy 1 long term leap every year when the leap is open for trading , do it every year consistently , the early you start this , the better off you will be earlier , within 10 years, you will build a significant holding base and which will be enough for your retirement with a decent life. Of course , you can buy more if financially you can afford. Holding Microsoft's stock is better than cash, the stock will appreciate every year, if you look at it in 10 years, but the cash will not. So, why worry you will lose $5 or $10 of time premium as long as you can hold more stocks ? By timing the market, you make small profit but lose big holdings in the long run. Think about it and hope your dream of financial indenpendence come true early!!!! Life is limit, say, 100 years, so enjoy every moment you still own !!!