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Technology Stocks : All About Sun Microsystems -- Ignore unavailable to you. Want to Upgrade?

To: Charles Tutt who wrote (18624)	8/13/1999 11:26:00 PM
From: Charles Tutt	Respond to of 64865

Well, we're about halfway through the quarter. I wonder how things are shaping up.

To: Charles Tutt who wrote (18624)	8/16/1999 11:48:00 AM
From: Alok Sinha	Respond to of 64865

The risk of a covered call and naked put is essentially the same. The only time I buy puts on my holdings is when I feel that the shares have had an unsustainable run-up and there will be some consolidation (and backing and fillig up). I sell covered calls more frequently because the volatility allows you to earn substantial premium. I do close out my covered call positions if the stock price is close to the exercize as we approach expiration, since the time premium drops like a rock in the last couple of weeks. The option positions that I take on is not a bearish or bullish view on the stock. It is simply a way to hedge the volatility of the portfolio's value using rather conservative techniques. Being wrong does not hurt much. "but aren't covered calls the equivalent of selling naked puts, so assuming you buy puts without much price movement, won't they just cancel out part of your buy-write position?" In volatile stcoks such as SUNW, the price movement is quite substantial independent of the fundamentals. Also if I buy puts on something like SUNW (a stock that I really like for long term), I will sell puts for the next lower strike, since I don't mind getting assigned the shares at that price. (This is what happened after the first qtr earnings when a ton of my naked puts at 57.5 and 55 got assigned - and I was having self-doubts about this approach). Long term buy (don't pay attention) and hold (as a strategy) works but you have to be right about individual stock and the market. Option strategies will allow you to make money without any long term views about either. Regards Alok