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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Sanjay Mazumdar who wrote (82156)	7/6/2000 5:59:10 PM
From: Knighty Tin	Read Replies (3) \| Respond to of 132070

Sanjay, The strategies on Vert and Vignette are different. With Vert, I am buying the stock and selling a call option just out of the money and nearly 2 1/2 years out in time, the January 2003 $40 strike price, to name names. This is a maximum income play, not a capital appreciation play, though the standstill return is over 47% a year. In this one, I am hoping Vert goes up far and fast, but I am capping my upside for that huge standstill return and the much lower risk profile. If the stock goes to $100 by this time next year, for example, many people who put on this type of trade would be unhappy about the $63 of appreciation they missed. Me, I would simply unwind my position for something like a measley 100% profit and move on to my next winner. I am not trying to make all of the money, just a lot of it at a very much lower risk profile. With Vignette, I am shorting the December $55, $60 and $50 puts, and buying the $30 and $35 puts. The fact that I am buying out of the money puts does not make me bearish. It simply allows me to try to collect a fat option premium without taking all of the downside of a volatile stock. This is a bullish position, although it is again much lower risk and lower return than a straight buy and is in my maximum income portfolio. The key to all of these trades is that they do not stand alone in the max inc portfolios. I also have several bearish credit spreads on stocks I do not like and many that are now butterfly or neutral spreads to reduce the risk ratio even more. There are also many income positions that are more traditional in this portfolio. Any one trade can run against you and hurt, but if you build a diversified maximum income portfolio taking in fat premiums all of the time, I have found that you make a huge amount of return at nearly no risk. BTW, I use credit spreads, which means that after the buy and the sell are netted out, cash comes into my account. I don't hate Broadvision as a company, but I consider it overpriced as a stock. In no way do I consider it a gorilla, not with 9 cents of earnings, nearly all of which came from investments, and $65 million in sales. In fact, I don't subscribe to the Gorilla Theory in general. The only one I know of was Microsoft and it got zapped by a bigger ape named Reno. With BVSN, it is a question of price. I would probably be a buyer, at least for the max income portfolios, if it was in the 30s. Here, I am more inclined to see if it runs up, at which point I may buy puts or put on bearish spreads for the crash, or comes to the price point where I am interested in bullish spreads. I consider Vitria the same sort of situation as BVSN. I like the company and its products, but the stock price is a stumbling block for me. I want to like Crossworlds, but so far neither the products nor the business plan ring my chimes.