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Strategies & Market Trends : Options -- Ignore unavailable to you. Want to Upgrade?

To: Andy who wrote (701)	1/5/2000 9:03:00 PM
From: SecularBull	Read Replies (1) \| Respond to of 8096

QCOM isn't my bag, baby. However, if it does return to old highs, your options value will certainly be restored. To sell or hold? You need to define your investment horizon. Are you long QCOM, or not? Long, you hold. Not, you sell when you can maximize profits. Selling in a correction ought to be avoided. You should be buying options on stocks that you're bullish on during corrections. The most $$$$ that I made in options was when I loaded the boat during the October lows in 1998. It sucked to have to shell out capital (on margin in my case) to buy in that environment, but it proved to be correct. I was a buyer of JDSU and BMCS calls today. And, no, I'm not responsible for your Dell. Did you buy a laptop? Regards, LoD

To: Andy who wrote (701)	1/5/2000 9:15:00 PM
From: SecularBull	Respond to of 8096

One other option in a falling market is to write "covered" calls against your long options positions. For instance, you might write Jan 02 $175s against your Jan 02 $125 position. You get to pocket the premium from the sale (hedges your loss on your $125s), and perhaps buy back the $175s at a much lower price (close the short) if the stock does indeed drop. Caveat: Eventhough you own calls (your long calls) to "cover" the short position (the calls you wrote), the rules don't allow your brokerage to consider them truly covered. True covered calls are hedged with equity, not options. Therefore, to short calls against a long position in calls ties up margin (or cash). You have to maintain enough cash (or margin)to meet either 1/3rd or 1/2 (can't remember which) of the underlying value of the short position (eventhough you're actually covered with the long position). I'm such an unabashed bull that I have trouble writing calls (to my own detriment). But at least I don't buy puts! Hope this helps. LoD

To: Andy who wrote (701)	1/5/2000 11:32:00 PM
From: Jeffry K. Smith	Read Replies (2) \| Respond to of 8096

Andy, not that it applies to your current holdings, but a trick I learned from edamo you might want to consider: create spreads with a long leg of a DIM option (best with a long term one) and selling a short term option at a higher strike price. With an expensive stock, or one that your brokerage firm will not allow to be margined, it allows you to "own" the stock for a period of time and sell "calls" on it as if you owned the stock. I wish I could offer some advice on your options, but I have about sworn off long calls, since I've had a number of bad experiences. I've still got a lot to learn! Best, Jeff Smith