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

To: jjs_ynot who wrote (1516)	1/23/2000 3:01:00 PM
From: Jill	Respond to of 8096

Options Investor's March seminar sold out so they're holding a second one. Is anybody going? They feel tech is holding strong and right now there are no signs of a Feb correction. They also have a nice little explanation of selling naked puts (one of my favorite strategies). Here's a bit of an excerpt, and it echoes exactly what I was taught: First Rule of selling Naked Puts (Do NOT Bend this Rule!): NEVER sell Puts on a company you wouldn't mind owning. Murphy is in charge! If you sell a Naked Put on a company you don't want to own, you'll end up owning it. Think of selling Puts as writing an insurance policy. Insurance companies won't sell life insurance to terminally ill patients. There's too much risk of paying a claim. You don't want to insure terminally ill stocks. Companies like AOL or Lucent may have a bad quarter or two and lose some steam, but they won't lay a rotten egg like Boston Chicken (BOST). And here's some nice tidbits on covered call writing--something to do when you're out of the intensive build-ing wealth stage of your portfolio (I'm not there yet), and want monthly income on a portion of it: Investors usually write covered-calls to generate monthly income, collecting the premium for the sale of an option against a stock position in his or her portfolio. This conservative strategy can be used effectively on all type of stocks as long as the outlook (fundamental or technical) for the issue is favorable. One concern is the possibility of unrealized gains when the share value rises significantly or the loss of the underlying issue in assignment. Both of these concerns have merit but statistics suggest that a systematic program of covered writing outperforms stock ownership on a consistent basis. End of excerpt. Personally I would choose to write covered calls on a "steadier" stock than QCOM or JDSU. I might choose it in EMC or NTAP--which although very profitable, seem to rise rather steadily, and not be as subject to the huge momentum shifts. Jill