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

To: Jill who wrote (6210)	9/12/1999 9:43:00 AM
From: Mike Buckley	Respond to of 54805

But if you also want to hold onto RMBS (consider for instance how much gorillas like MSFT INTL or prince/kings like DELL made over 5 or 10 years---when DELL was rocking you could've invested $5,000 in 1992 and be a millionaire 5 years later...) or any stock you are bullish on, this particular profit may look small down the line, even though the percentage return is fantastic. Jill, You warm my heart with that long sentence. The difference between your long sentences and mine is that yours are understandable. :) --Mike Buckley

To: Jill who wrote (6210)	9/12/1999 11:49:00 AM
From: Kayaker	Read Replies (1) \| Respond to of 54805

Also, as somebody else posted, you tie up margin collateral and have to be willing--but I don't mind, as you might as well use it for something, and I don't buy on margin. Also, the collateral requirement for the short uncovered put is recalculated every day as the stock price moves, so if we had a big dip, you might get a margin call. You also have to be financial able to buy those shares at any time if they are "put" to you, though it's unlikely with the longer term puts. The Stockhawk play (buy 100 shares, sell 1 call, sell 1 put) is called a "covered write straddle". You own the stock and sell a "straddle". (for more see LG Mcmillan, Options as a Strategic Investment, pages 282-300, -- still in the first 1/3 of the book, the ONLY options book :)

To: Jill who wrote (6210)	9/12/1999 11:21:00 PM
From: StockHawk	Respond to of 54805

>Your options play< Hi Jill, I am going to respond to some of the questions you and others raised concerning my RMBS options idea. >as somebody else posted, you tie up margin collateral and have to be willing--but I don't mind, as you might as well use it for something< Good point. I should have addressed the margin issue. The naked put would require margin. I had been thinking about the cash that would be necessary to put the strategy in play assuming it was done by an investor like myself who already had an account filled with long stock. That stock was being held anyway (all that QCOM, CSCO, INTC, etc) and would therefore meet the margin requirement. I should have made that clear. Sorry. >when DELL was rocking you could've invested $5,000 in 1992 and be a millionaire 5 years later...) or any stock you are bullish on, this particular profit may look small down the line, even though the percentage return is fantastic.< Yup, we could all use a few DELLs. No question, there is no better place to be than long on a stock that vaults ahead many times over. The scenario I presented would be for someone who is mildly bullish on RMBS but would not mind some downside protection - since the position would show a profit if RMBS moved up, if it stayed the same and even if it declined slightly. Someone who expects the stock to jump a few thousand percent should probably buy the stock long (and then buy a few inexpensive way out of the money calls to enhance the upside, if available) > And if in a regular brokerage account you'd face tax consequences, which you might not want at that point.< I hate taxes, but as long as I have nice gains, I'll pay them. I would never refuse a salary increase just because of Fed, State, City and FICA, and I would not avoid a gain over concerns about long term capital gains taxes. That said, we should all max out our IRA's and 401k's , and probably vote Republican <vbg> StockHawk