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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: freeus who wrote (145368)	10/20/1999 5:22:00 PM
From: edamo	Read Replies (1) \| Respond to of 176387

freeus...ot ot ot the first thing any investor must establish is their level of risk tolerance. this level can only be determined through experience and a series of successful investments based on a constant investment style. there is no textbook answer. you must do what works for you and you alone. if you constantly fail and find your capital diminishing then your style or lack of same is not working. if you have a low risk tolerance, the last thing you should do is attempt to time or trade. if one has an aversion to risk the safest investments are index funds, or hybrids as qqq(naz100) buy and hold, as with the qqq, you have a market basket heavily weighted in that which you may want to own (intc,csco,dell,msft,sunw,etc) as far as options they aren't for most people. i see many postings on the threads of risk of options, and usually those who believe that they are doing the least risky thing as buying calls or puts are wrong, the brokerages allow anybody to buy, but reserve selling for those who can show certain financial capacity. the risk is that of the brokerage with the sellers as you have their money...no risk when they take your money. from what i can see of your risk tolerance, if i was you, i would only be a buyer of deep in the money leap calls, using them as a stock replacement. you can use this method to gain the same leverage you get by margin borrowing. but remember, you have a time limit. for instance instead of borrowing against margin to buy dell at 40, buy a ditm leap call, say an 0220, and you will find the premium perhaps at 22 to 23, about 5-10% above the market. you have just bought dell at a 50% discount with no debt. the call is so deep that it moves for all intent and purpose in par with the common. "playing" as you put it should apply to a game...unless you have money to burn, this ain't no game! sit down and evaluate what you have, what you want, and what type of return you desire. then analyze your desires and see if they are realistic. a lot of hype on these boards, also a lot of wannabe's, who are losers. i've been in the market for thirty years. did options in my twenties for a thrill, this was prior to the ability to sell on a secondary market. got wiped out by the arab oil embargo. stood away from the market for a while until i determined if my "style" is fact or fantasy. confidence in success builds risk tolerance. but it has to be success not luck, or you're living a lie. i would get off of margin, and stay off.....i use it, but as a swing loan, knowing when positions will close and cover. i take losses, i take profits, i learn from my loss, i don't look back once i take a profit. yesterday the market could have gone either way..intc testing 65, in my mind a trade below could have caused chaos...i closed any profitable options positions i had, could have held and made more today, but i'm not driven by "woulda, shoulda,coulda" or greed...took a profit, offset a loss...released capacity, and started buying this morning when a clearer short term up trend appeared.. a bit long winded...pm me if you like! stay conservative, grind away, don't fall for the hype........it's your money, better to grow a bit, then lose!

To: freeus who wrote (145368)	10/20/1999 8:14:00 PM
From: rudedog	Read Replies (2) \| Respond to of 176387

edamo's post was a great response. I have tucked it away in my "reference gems" file. Can you safely sell covered calls on ALL your core holdings if its at the right time (I imagine when the stock is making new highs and going up more than you could imagine) Not quite right - if the stock is actually soaring, you are likely to break even or lose money selling calls. Selling covered calls works best when the expectation is that the stock will rise, but it actually does not. If the stock is actually rising, you may have your underlying called away, and unless that is your intent (i.e. sell the stock at a price you like and get the premium too), you may have to buy back at a premium - or buy back your calls before the stock gets called, which in that scenario will probably lose money. sell puts on ALL your core holdings if you do it when the stock tanks You don't sell the puts on stock you hold - it is on stock you would like to hold (or could tolerate holding) since if you lose the bet, you have to BUY the underlying. That's what edamo meant by reserving margin for swing. If I sell puts and the stock is put to me, I use any cash and then margin to take the underlying, but unless my real intent was to buy the stock, I would unload it as soon as the position was profitable to get that margin paid down. And depending on the market, maybe before then... Selling puts when a stock tanks is bullish - you are claiming that you can pick the bottom and that it will stay above the strike less premium. If you lose that bet, you buy the stock at the strike. Having just played that game, I can say it's not the best way to relax. I have learned a lot from edamo and some others about this part of the market over the last year. The advice edamo gives will help you sleep at night. Understand your risks, don't go outside of your comfort zone, and if the deal goes against you, execute your exit strategy immediately and go on to the next deal.