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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: carl a. mehr who wrote (90388)	10/15/1999 8:46:00 PM
From: John O'Neill	Read Replies (2) \| Respond to of 186894

>>I am sure that Paul keeps it simple and with less commissions, by selling plain old puts in its purest naked form. That would certainly be what the big boys like Intel and Microsoft would do, as buying a few more shares would not be a big deal. << Hi Carl.. just to reiterate...a person would have to sell short the stock, not buy it, to sell covered puts......i doubt paul short's INTC often.. as far as MSFT, DELL & INTC.. a favorite trick they do have is to sell puts then take the $$from the puts to buy stock into the company treasury.....this drives the price of the stock up, which usually causes the puts to expire worthless...they can then use these extra shares to provide the stock for staff who are exercising their options. This keeps the float (amount of shares) more constant because the company didn't have to issue new shares to cover exercising of options......then the company reports the profit from the sale of puts as income...What a deal!!!!....if by chance the stock goes down, and the puts are exercised.....the company merely buys the stock for the company treasury...they needed to buy the stock anyway for the stock buy back program........and they get to keep the original premium they got when the sold the puts...so the buyback was cheaper than if they had just bought back stock in the first place. this has worked like a champ....but stock buybacks didn't look convincing last two weeks...companies often buy back before announcing earnings and there wasn't any indications i saw that looks like buy back time.....Remember, many companies, not INTC they have $$, BORROW the money to buy back their stock.....this is like a leveraged bomb waiting to go off....when the buybacks stop that will really crunch the market....especially when co staff, seeing this market, decide they better exercise now and sell...then the co has to issue the stock and it's sold on the open market driving the price down..... as interest rates rise....i think many co's will re-examine the policy of borrowing money for buy back