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Technology Stocks : Cymer (CYMI) -- Ignore unavailable to you. Want to Upgrade?

To: esl who wrote (23226)	10/13/1999 9:56:00 AM
From: Ira Player	Read Replies (1) \| Respond to of 25960

As I stated, I would not do this with CYMI now. However, for volatile stocks, covered call writing, with some technical analysis, is very effective. By the way, a covered call writer doesn't face all of the downside risk of the "longs". Your response allows only a single write. IF the market is retreating (say to 34), you can buy back the Nov 40, for say, 1, and sell the 35 for 3 (maybe more if implied volatility rises), reducing your basis further. In my example, to 32 9/16. I don't usually do this, but it is a method of recovery, if you believe the drop will be limit in size and for an extended time. Ira

To: esl who wrote (23226)	10/13/1999 4:34:00 PM
From: Jerome	Respond to of 25960

esl, The idea is to write a covered call month in and month out. The cumulative effect goes to the bottom line. Ideally I write covered calls on CYMI at is breaks new highs. This month its the 40's. Next month it could be the 45's or the 35's, depending on where it winds up after earnings. Another strategy is to write a covered call at the stock peaks (CYMI at 38), undo the covered call when it can be redeemed at a fraction of the purchase price, and then rewrite the covered call as it peaks again in the same month, at the same strike. This will happen about once every 5 or six months and involves a bit of luck. I have done this a few months back on AMAT, KLIC, CYMI, ETEC, ADPT, and ASYT. So what started off as a 14% return became a 20% return in one month. It would be nice if those that disdain covered calls would go to the library, read up on covered calls, learn something, and profit from it. When the call premium is right (a 12 % difference between the stock price, the exercise price and the call premium) take the money and run. Next month will bring a new game plan and a new opportunity. If not with CYMI then with another stock in this same group. As options expire each month I do the math on a group of stocks and the best call writes are CYMI, LRCX, NVLS, AMAT, and ETEC. The best strike price is about 3 to 5 points above the expiration price. Good Luck to long term holders. Jerome