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

To: Duncan J Horn who wrote (7759)	5/9/2000 8:09:00 AM
From: edamo	Read Replies (1) \| Respond to of 8096

duncan "objectives" what all must determine in the use of options as a portfolio enhancement is your reasoning for using derivitives. if it is to "gamble" based on leverage then good for you, you can win big, but lose even bigger. options at any point can be used to generate income, hedge an established position or enter a new position. if you focus on these primary points, you can succeed with lessened risk. tom k. posted a desire for 30% per annum returns, i posted my current positions which will give me a similar return. 30% will double your money in about 28 months....not the screaming "ten baggers" of other threads....but not the angst that those same threads see now as leap calls bought at the incorrect time are now worthless. don't use the "i can afford to lose" mindset, because it will cause you to lose, and when you accumulate these "i can affords", you diminish capital. options are finite, if you position for "income", take the profits as they develop, as it is your "income", if you position to hedge, understand when the hedge is no longer required, let it go at a profit, if you position to own, follow through, unless the underlying fundamentals change. don't fall for the constant "hype", that permeates these threads, there exists no such thing as "house", "mm" conspiracies, as in "they are using head fakes to take your money away"...too much new age psych babble, the only "head fake" is in your mind... they are no smarter then you, they are just able to move a market based on magnitude. use this magnitude and volatility as your ally.....i believe marty zweig once stated... "the trend is your friend".....up, down or sideways, a trend is a trend (guess you've been around awhile if you recognize who marty zweig was!)

To: Duncan J Horn who wrote (7759)	5/9/2000 10:03:00 AM
From: Tom K.	Respond to of 8096

...Pure annualized return appears to favor put selling and that it seems to me that it would be better use this to provide a consistent day in and day out cash flow..... appreciate any and all comments on which approach others prefer as well as a critique of this logic.... Duncan, everyone has to establish their own objectives to determine which strategy is correct for them. In my case, I want cash flow (30%/year on the base). I don't particularly care to own stocks, so I try to stay in cash and T-Bills. I generally sell PUTs looking for expiration. Been doing this regularly for a few years. I'm sometimes envious when I hear people talk about the 10 baggers, however, in the long run I recall that the tortoise won. My approach has brought others to invest with me, so now I'm very conservative in my trades. So to my point, the tight rules that I use for PUT selling has been working in a neutral to rising market, so why can't the same rules work when applied to selling CALLs (naked) in a neutral to falling market. I don't know why not as it seems to make sense, so I'm trying it cautiously. I've read all the stuff about how dangerous it can be, but I heard the same about naked PUTs before I began, and I did fine during this downturn. I prefer to march to my own drum, but with eyes wide open and cash to cover. The point is, your personal objectives should help to drive the strategy (approach) that you choose. Hope that's helpful. Tom