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

To: jmac who wrote (51245)	11/21/1999 12:11:00 AM
From: eikos	Read Replies (3) \| Respond to of 152472

It's the law. Thanks. I should have known it is a law that we can't write puts in a retirement account. Obviously. Something so stupid had to come from Washington. Laws I suppose are designed to protect people but in this case the law does just the opposite. I believe call buying is permitted in retirement accounts even though calls can and do most times, expire worthless. You could take your entire retirement account and buy the 400 calls on QCOM next month and end up at zero if the stock closes at $399. Out in the street. Penniless. Broke. Next stop Hobotown. But the law won't let you sell(in your IRA) ten puts of the QCOM Jan 00, 300's, even if you have $300K in cash to buy the stock if it goes the wrong way ( or the right way if you're the clever guy who actually wants to own the stock some $65 cheaper than it closed on Friday). In this case, I have to say that the law is absurd. As I said earlier, this is less risky then buying the stock outright. Most certainly it's less risky than buying calls. The law has in fact increased the potential of risk taking in an IRA and the possibility that we will have more hobos. Janet Reno just took MSFT to the cleaners even though she admitted that she has never booted up a computer. Why should I be surprised that Washington is passing laws on the use of margin even though they don't understand how it works? Writing puts on stocks that you favor and believe will move up is a good strategy. Writing puts on stocks you really want to buy cheaper than the current market price is a no brainer. Just be prepared to live with the fact that the stock might get away from you. No one knows which direction the stock will move. That's why the seller gets paid. He has the "obligation" to buy the stock cheaper. The guy on the other side has the "option" to sell at the strike price of your contract. This put buyer paid good money, hard earned money, for a put seller to agree to buy QCOM cheaper. It is such a good deal. For the seller of QCOM puts. With reference to your comment that you don't write puts on stocks that skyrocket, well I don't care if it moves up 1 point or 100 points above my strike. As long as it expires worthless. That's my objective. Of course, moving up faster is better than slower. Then I can liquidate and do it again. For me, if I'm going to take a risk, then I don't mind reducing the risk by selling a put. I have a long term core position in QCOM and I don't really fancy buying more on margin. But QCOM's rise give me awesome power to make my margin work for me. I use that power to write the puts. In the event the stock is "put" to me, I'll use the margin to buy the stock. In that case, I'll be looking to unload the shares just put to me. I don't care if it's our darling QCOM and if the shares are going to $1000. I want off margin because I don't pay margin interest unless it's a cost of doing business. My business is making money and taking other people's money. Not paying money. So, I'll sell the calls. And receive a handsome premium I expect. If my calls expire worthless, I'll sell the calls again and again until my unwanted shares disappear. And when the stock is called away? Then I'll sell the puts again if I believe it is a sound move. I'm prepared to take people's money every side of this game. I'll take it from the bears. From the bulls. It doesn't matter to me. There are fanatics on every side of Q. God I love them all. The bulls are invincible though. I try not to mess with them Not to brag, but with my strategy I've stalked and killed so many QCOM bears over the past six months I should get a trophy. Too many variables involved here for you to make a such broad statement as you did in the second paragraph of your post. Sort of makes me out to be a mug don't you think? We each have our own investment philosophy. I hope you understand mine a bit better now. Regards, Eikos