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

To: Ira Player who wrote (23227)	10/13/1999 4:59:00 PM
From: Jerome	Read Replies (2) \| Respond to of 25960

Ira, your analysis is correct. There is one downside to writing a covered call. Suppose that tomorrow You buy CYMI at 34 1/2 with the intention of writing the Nov. 35's for 3 1/2. or the 40's for 1 1/2. Well here is what could happen. CYMI drops to 30 and the call premium disappears. In this situation you are in just the same position that the long term holders are. I had this happen last month on ADPT. I bought the stock at 42 and within 30 minutes it dropped to 39, and in the following weeks it continued to drop all the way to 35. I became an involuntary long term holder. I held on and the stock recovered to 43. (up today 7/8) Because I believe that it is in an uptrend I will write the Nov 45's when the stock breaks the 44-45 level. I would suggest that covered call writing works better when the stock is already in your inventory. If a person had 600 shares of CYMI I would wait until it recovered to about 37 or 38 and then write the Nov 40's (200 shares) After earnings are announced if it pops to 41 or 42 write the NOV 45's.(200 shares) If it rises further your last 200 shares will give you additional lift to your portfolio. If you can outline a better strategy post it. Jerome If the stock rises further