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

To: Poet who wrote (5556)	3/26/2000 5:33:00 PM
From: Seldom_Blue	Read Replies (2) \| Respond to of 8096

I am also interested in CC repair, since I have lost many dollars when stocks unexpectedly rise. BVSN and PMCS are two examples. I got into BVSN at the split adjusted price of 11, and PMCS at 45. Have not participated in much of the run because of the CCs. I guess the only way, if one sees continued upside, is to buy the calls back. Since I sold the calls in the first place, I am always amazed when the stock passes my price so quickly. This is what I have come up with. I will monitor the stock until it passes the strike. Once it does that, the rise in premium slows just a bit (percentage wise). I have been buying back just a portion of the written CCs. If the stock continue to rise, I can eventually exercise the option, take the loss on the buyback as short term capital loss, and preserve the gain. If stock stalls or falls slightly, at least I am making something on the time value. This does not seem to work very well, but that is the best I can come up with. I am very interested in listening to other suggestions. CC is a great way to generate steady returns in a flat or slightly bullish market. But it does limit one's upside. Seldom Blue

To: Poet who wrote (5556)	3/27/2000 11:48:00 AM
From: PAL	Read Replies (3) \| Respond to of 8096

PAL, you mentioned buying back half your calls, then selling more further up (the April 160's, I believe) rather than out (to Mays or beyond). This only partially repairs the situation, no? Or are you willing to have half your shares called out? Hi Poet: in hindsight, everyone makes mistakes: big and small. the idea is to contain the damage and not be greedy trying to profit from that situation. The last one leads to throwing good money after bad. Right now the market is very very volatile and we have to adjust accordingly. That's why I made the decision to do a repair only on 1/2 of my position. Will tackle the other half later. You have read how I approached the problem from my post on Option G&K. Right now the stock is being overbought, NASDAQ zooming past 5,000, and QCOM is on fire (good and bad), but remember quarterly window dressings by mutual funds are still going. Before April expiry there are events for QCOM: inflation reports (PPI and CPI), QCOM earnings report which they already said is not going to be spectacular due to softening demand. So, we are in the mids of uncercainty and overbought situation: not a good time to do a repair. This is the time to close short positions to increase margin capacity and wait for a pull back to commit more naked positions. Right now I am staying put with the other half: the extrinsic value is very rich. as we approach the expiry date ( 4 more weeks), the time decay will kick in and the extrinsic value will erose as a result. we still have time. good luck paul