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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: snoozlooze who wrote (3976)	7/18/1999 12:45:00 PM
From: Uncle Frank	Read Replies (2) \| Respond to of 54805

Hi, snoozlooze, and welcome to the thread. We can always use another Gorilla Hunter in our band <g>. My strategy with cc's would be to sell short term out of the money calls during periods when I expect the market to be flat or down and there are no critical events for the underlying issues. My intent is to pocket the premiums and keep the stock. This is really a cash generating scheme (about the only way I can put new money into my IRA) and not a hedge against a down turn, as I can only pick up a few percent a month for out of the money calls. Please fill us in on jdsu. Is the merger still looking accretive in the short term? I think I heard something about a secondary <dilution>. How do the shareholders think this will affect the stock? Frank

To: snoozlooze who wrote (3976)	7/18/1999 12:54:00 PM
From: RoseCampion	Read Replies (1) \| Respond to of 54805

Re: covered calls, LEAPS strategies If we were to employ CC's as a Y2K insurance on our Gorilla holdings, what is the safest strategy? I would hate to lose the underlying securities. I would be interested in any knowledgable answer on this, too. I know you have to be careful - recent personal experience: "Way back" in early June, I wrote the very-short-term, very-out-of-the-money June 125 CC's on all the QCOM shares in my retirement account, reasoning that even it "couldn't possibly go that far, that fast". The stock at that point was still under $110 at that point, and I got a whole buck each for the calls. This wasn't for protection, just a way to generate quick cash in my IRA for other nefarious purposes. <g> Of course, we closed at 129 3/4 on June 18th, and I got my precious Q shares called away at a 3+ point loss. (Has a happy ending, though: the next Monday, on the mid-morning dip back to 126 or so, I used the call proceeds to buy a truckload of Oct 140 calls, which are now worth twice what I paid for them - much more than if I had just held onto the Q stock. So it's the best investing "error" I've made so far this year. :) If you're really worried about your gorrilla holdings , you can always buy one- or two-year-out LEAPS puts, which will retain some value for a long time even if the underlying stock explodes in value. (Out-of-the-money puts hold their value for a long, long time - this isn't just psychological, but a direct consequence of the standard Black-Scholes option pricing formula.) You can sell them in Jan 2000 after the madness blows over and consider it to have been expensive but worthwhile insurance. BTW, for beginning LEAPSters, I highly recommend the book on LEAPS by Harrison Roth - a highly readable and thorough discussion of the many-splendored uses of these vehicles for the individual investor. -Rose-