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To: Ian@SI who wrote (143641)	10/3/1999 12:24:00 AM
From: edamo	Respond to of 176387

ian...ot ot ot re: sophistication" never got the feeling of rude being a less then sophisticated investor or businessman based on his posts. options have their place as an investment enhancement tool for one's portfolio. like any other tool, it works better once you learn which end you should hold! good luck...ed a.

To: Ian@SI who wrote (143641)	10/3/1999 12:26:00 PM
From: rudedog	Read Replies (2) \| Respond to of 176387

Ian - re: I got the impression from rude's post that he felt this was free money available to anyone who felt like taking it. On the contrary, I said exactly the opposite. In Message 11426907 I said In my mind, option sales are not a way to generate cash if you are tight. Most of the people I know who have gotten burned on options lost because they did not have the money to adjust their position when things did not go as planned. I have yet to find anyone giving away money, in the market or elsewhere. re: If rude is a more sophisticated investor than his posts would indicate to me, then let him go for it. I don't know if I qualify as a "sophisticated investor" by your terms. I have been investing since summer of 1968, so I have more than 30 years' experience in equities markets. But I have never felt the need to do much "advanced analysis" and have instead concentrated on a few investments that I can monitor closely. I have dabbled in options occasionally over the years but it was not until this year that I felt comfortable in taking sizable option positions. I do not intend to advise others on their investments or paint myself as a guru. I just post what I am doing both to get comment from others on the thread and to give people a sense of how I make decisions, which may help them to put my other posts in context. I have posted the transactions below to many people on the thread via PM but not in total on the thread, but I will do so now to give you a better feel for how my planning has worked so far this year. All prices and quantities split adjusted courtesy of SI's portfolio tracking. I sold 20,000 shares of CPQ in early February at about 42 and used the proceeds to buy 15000 CSCO at 48. I sold an additional 45,000 CPQ between 3/1 and 4/9/99 at an average price of 31 or so. I sold 30,000 DELL between 4/23 and 5/12/99 at an average price of a little over 44. JRI, chuzz and others were aware of my activity and thinking at the time and helped me evaluate some diversification options. I used the proceeds to add to my position in other issues PFE (15,000 at an average of 34), CSCO (5000 at 50), TYC (20,000 at about 53, 3 buys), LU (5000 at about 55), INTC (5000 at 51.5 in May), and MSFT (10000 at 73). I was in and out of NOVL at break even, RNWK for a small gain, and small positions in some internet stocks for a slight loss. DELL and CPQ are still below where I sold, CPQ by nearly 30% (and 43% YTD). The value of what I purchased is up 47% in the same period. Looks like a benefit of about $1.6M overall on that transaction. I still hold 66,000 DELL shares and over 80,000 CPQ, both of which have been the underlying for my covered calls. Neither DELL nor CPQ is in my list of leading performers for 1999 but I am confident that both will recover in 2000. In addition, I already held 10000 MSFT, 4000 LU, 10,000 CSCO and 4000 INTC going into the year. The whole of my portfolio is up 4.6%. Without CPQ it would have been up over 18% In addition I have sold covered calls on CPQ and DELL all year. The total I have made on premiums (including the put sale yesterday) is about $480,000 YTD. This raises the total from 4.6% for the equities to over 8% including option premiums. Tax consequences will change that a little of course. I don't regret holding the large CPQ stake - it will come back eventually, and I would have had a big hit from cap gains. Likewise with the DELL. With DELL performance coming back, it may turn out that just holding it would have been smarter since the appreciation in the stocks I purchased may not cover the tax on what I sold, when you consider that I also could have made call premiums. But I think I needed to diversify more. Going into 1999 I had 70% of my portfolio in 2 stocks, DELL and CPQ, and I will sleep better with the portfolio I have now.