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Non-Tech : QQQ - Nasdaq 100 Trust -- Ignore unavailable to you. Want to Upgrade?

To: RoseCampion who wrote (328)	6/12/2000 7:53:00 PM
From: Rocket Scientist	Respond to of 840

I've been playing with a buy-write strategy on QQQ for a few months. I like to sell calls a few percent out of the money...with a target income of about 3% for one month. For example, in late Feb when QQQ was about 195, I sold March 204s for 6.50. In late April, with QQQ at 82.75, I sold May90s for 3.50. So buyers are willing to pay 3% per month for the right to a highly leveraged profit if the stock goes up more than 5% in a month. I feel pretty comfortable taking the opposite side of that bet. If the index goes up enough that the call is ITM near expiration, I buy it back, sometimes taking a real loss, offsetting the repurchase price if needed for cash flow reasons by selling some of the underlying security (or others w/ CGs). This approach of course limits participation in upswings, but seems to provide pretty good cash income, plus useful tax losses in event market goes up more than 5%/month.

To: RoseCampion who wrote (328)	6/13/2000 8:50:00 AM
From: Cosmo Daisey	Respond to of 840

Rose, I have positioned the accounts I manage in QQQ and write calls. The account holders are looking for income but I must manage the underlying value the best that I can. I never worry about being called, never. My concern is to maintain their account value. My goal is 3-4 percent income a month. To accomplish this I buy QQQ on a down day and write on a up day. For example a new account in May I positioned @ 92 and wrote ATM @ 96 a few days later @ $6. If called the yield would be 10% and 6.5% if not. At options expiration in June the price was under my purchase price, I waited rather than write below the cost basis. I subsequently wrote July 96 @ $6. If I miss a month writing I can still meet the goal of 3-4% and if not I use the income as a reserve or to position more QQQ and limit my account holders to 3% withdrawl. I don't try to micro-manage these account by buying the calls back on a dip and writing again on an upturn because of time constraints but I sometimes do that with my own accounts. If you believe in the stock market as an investment vehicle there is no better way to generate income than with this strategy that I have found. A $300,000 account can generate $100,000 a year income for the owner, set aside a reserve and pay management fees. The average retirement account at retirement time is about $200,000 and an annual income of $72,000 is usually much more than the retiree made as a worker. Cosmo