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

To: edamo who wrote (7346)	5/4/2000 3:28:00 PM
From: Seldom_Blue	Read Replies (2) \| Respond to of 8096

Good points Ed. I have decided on a course of writing CCs for the time being. I have long term core holdings that I will not sell. I am slowly converting my options into commons or LEAPs. On these stocks or the options with little time value, I am writing CCs for about 10 or 20% above current market price for one or two months. My thinking is: If the stock goes pass the strike, I have made 10 or 20% in a month. I will buy back the calls at expiration and resell at higher strike. If the calls expire worthless, at least I have made 3-4%. I will stop doing this when the market is ready for a sustained upward movement. I think this should be a good strategy for this type of market. Any comments? Seldom Blue

To: edamo who wrote (7346)	5/4/2000 3:32:00 PM
From: RocketMan	Read Replies (2) \| Respond to of 8096

Thanks, those are all wise words. Perhaps we can discuss the "no safety in dim calls." I did not state my case very clearly then, so let me try again. Seems that many here were/are arguing for dim calls as being a better strategy than atm or otm, in that they are not as volatile, and move closer to 1-1 with the stock. The observation I was trying to make is that, while I agree with the lower volatility, one should not consider dim calls safe from losing most or all of their value in severe market downturns. I used GMST as an example, because someone else had posted about those calls, and I myself say my two-month out calls lose 80+% of their value and later expire worthless. Fortunately, I did not have that much invested in them, so I lived to fight another day. However, my question to you is this. For those wanting to invest in dim calls, what is your strategy. Do you buy well out, and try to ride out even severe corrections? Or do you set a stop? Or do you hedge with puts? What would your advice be to someone wanting to invest in dim calls in this market? BTW, I've been at least 75% cash for over a month now, and it's very difficult to sit and watch these violent moves up while being on the sidelines. Of course, when the market tanks, that cash looks mighty nice. I've had a talk with myself about greed and fear, and that it's ok to sit out a quarter or two in an uncertain market. I've got some cheap otm calls one small/mid caps that satisfy the gambler in me, while keeping my core holdings growing securely at 6-8%. Don't think I will re-enter this market fully until it establishes a definite direction and stabilizes, even if I lose the first 30-50% of its move. The market's volatility tells me we still have large translations ahead, either up or down, and my guess right now is down.