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To: Dr. David Gleitman who wrote (34352)	11/19/1999 3:34:00 PM
From: Detail-MD	Respond to of 41369

Why would you get called out @ 160 when (IF) the stock is at, say, $157? The buyer would have to pay a $3 premium, IMO. With all the open interest on the calls, I had figured the MMs would keep AOL below 160 today. Next week is a different story. Most are rolling into January options. After the split, we will get drawn towards 100 like a magnet by at least mid-Jan., IMO. Be careful on selling calls from here on out unless they are WAY out of the money. AOL could/should fly after Jan/Y2K into April 01. BTW, I like the APR 180 CALLS here @ $18--VIX cheap and split on Monday--you will have 2 times as many Apr 90 CALLS. What do you think AOL will be by April? Like $120-150 at least? That's a $30-60 return on a $9 investment (post-split) over a 5 month period (567%). Good luck David!!!

To: Dr. David Gleitman who wrote (34352)	12/1/1999 6:58:00 AM
From: Detail-MD	Respond to of 41369

RE: options exp. question...maybe this will help.... ""so wrote a lot of covered calls. both yesterday and today. for instance, thought about selling Qlogic (QLGC) as progress there has been slow but instead wrote the January 2000 120 call for 12 5/8 with the stock sitting at 114 down 6 on the day and stuffed the proceeds into my pocket. works like this : you sell the 'right to buy' Qlogic at 120 by the 3rd Friday in January. each contract covers 100 shares. so assuming i had a position of 500 QLogic shares and i wanted to max this out, i would write 5 contracts and take in $6312.50 by doing so. there is no margin requirement for writing calls against stock in which you have a position so that $6312.50 gets credited to the account immediately and constitutes available funds that can be put to work. can you write options in order to satisfy a margin call? no. note in options parlance 'selling' is referred to as 'writing'. probably due to the fact that you are actually closer to writing a 'contract that has rights' than selling something constitutes an asset. what is being sold is rights to that asset. and that right in this case is the right to purchase QLogic stock at 120 by expiration of that contract by the 3rd Friday in January. options are actually the simplest form of derivative. best case : QLogic closes at 119 64/65 on that 3rd Friday as you just stuck the poor sap who bought the contract for a teeny. the contract expires worthless as the right to buy stock that is below the contractual price (called the strike) has no value at expiration. it makes no sense to exercise that right as you could instead just go out into the open market and buy the stock for less. if QLogic is trading at say 124 on that 3rd Friday, the 120 call option can be exercised and your stock will be called away at 120. but you still made 8 5/8 points so any price north of 120 is still 'a good thing'. but instead of having your stock called away, you could buy the contract back for less than was paid out and pocket the difference. in fact, if QLogic stock goes to 100 the value of the January 2000 120 call will similarly decline in price and you can buy it back at that point. and then perhaps write the Jan 110 call. ie : you can play banker. worst case : QLogic closes that 3rd Friday below 101 3/8 which is 114 minus 12 5/8. you still keep the 12 5/8 so the paper loss is somewhat mitigated than if you had sat on thumbs during this time. so that is not so much of a worst case if you are committed to holding the stock long term. which is why i wrote the call rather than sell the stock. i don't think there is much of a chance QLogic gets taken out and shot. but what if i weren't so sure? what if i felt this indeed might be the onset of a serious correction and taking in 12 5/8 points wasn't enough for peace of mind? i could take the 12 5/8 points and use it to purchase put options. say the December 110 put. which can be had for 6 dollars. the December 110-put grants the right to sell (or 'put') the stock to the contract seller for 110 by the 3rd Friday of December when that contract expires. so the QLogic position is completely hedged (maximal downside loss is known) and (get this) paid for by selling the rights to buy it for 120 to someone else. and the differential (12 5/8 minus 6) of 6 5/8 gets credited to the account. the position is fully hedged and a profit has been had. if QLogic then goes to 30, i sell it for 110 by exercising the put option. i keep the 6 5/8 differential. so i am guaranteed to make 6 5/8 no matter what the stock does. if this is done each month, that is 6 * 12 = 72 points per year or an approximate gain of about 75 percent per annum."" good stuff.