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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: Voltaire who wrote (48478)	11/8/1999 11:43:00 AM
From: Ruffian	Respond to of 152472

Dr. J on Cnbc today. (Afternoon). cnbc.com

To: Voltaire who wrote (48478)	11/8/1999 12:40:00 PM
From: A.L. Reagan	Read Replies (2) \| Respond to of 152472

Voltaire: Are you taking the train to the mountains? I am one of Dave McG's 50 or so "dumb lurkers" who wrote calls last week, for which you were so excoriated. On Wednesday, w. Q @ $245 after coming down from $249 in the am after earnings, I wrote Dec. 260's for $15.25. (I was actually able to think this "dumb" move up all by myself w/o the suggestion of any poster.) Not being nearly as nimble as you in terms of cutting out of a bad position, I kept the position open through the weekend... so it looks like (as of Fri. close) I've kissed all my Q shares away for $260, unless I buy back the options sold @ $15.25 at like $48 (ouch!). So, after much agonizing over the weekend (including reading practically every post on this and the other Q threads), rather than buying back the options, I bought an equal number of shares this a.m. at $290 (on margin), so I can deliver same at $260 next month if called (the $30 ps hickey being a lot more pleasant than $45-$48ps). This looks pretty awful on the face of it. But then, I look at my Q* position between the time I did this "dumb" thing Wednesday, and this a.m. When I did the "dumb" thing, I received downside protection from $245 to $230. So that had value. (If the stock had retrenched somewhat after earnings & split, then this would have been "smart".) So, using a single share example, just before I did this on Wed. my Q had a FMV of $245. What is it this am (assuming $290 ps for discussion). Original share $290 Option premium 15 Share bot @ $290* 260 less: margin loan (290) Value of Q position today: $275 Value of Q position Wed: $245 So, in what really is pretty much a worse case scenario for writing covered calls, I've left $15 on the table, in return for $15 of downside insurance at the outset, but I did get 2/3rds of the last two days spectacular gains, so not a total shut-out. But now it looks like I've doubled-up my risk (beta, etc.) on Q*. But is this really true? Not unless we go below $260. If there's a 10% downhill trip from $290 to $260 twixt now and December, the new share doesn't care - it's a goner @ $260 regardless. Except that if that happens I could buy back those options at maybe close to nada, and possibly write Jan or Feb calls for another $15-$25 premium (depending on strike price) on the new share. So my big risk in "bailing out" of this caper is if Q tanks, more or less permanently, under $260. In assessing this risk over the weekend, three posts were extremely useful in solidifying my thinking: 1. The link to the Motley Fool article about not bailing out of winners that have run-up when you still believe in the Company's fundamentals. 2. The 100-month comparative chart of Q, Dell, Cisco, etc. This reminded me how much further a unique co. like Q can run. 3. In the heart, or gut, your allegory. (Here, Voltaire - I'll "kiss your ass" for that post - it was worth it for the emotional lift.) So, as a "dumb lurker" (since 7/97) I want to say thanks to all, and convey best wishes that this thread continue to encourage a variety of viewpoints shared in a constructive and civil fashion.