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To: hivemind who wrote (728)	7/25/2000 7:57:56 AM
From: Clappy	Read Replies (1) \| Respond to of 1115

Tom and Hivemind, Thanks for the replies. Hivemind, Thanks for your analysis and for time in explaining another strategy. Mind you that I'm new to this. Besides, my coffee hasn't quite kicked in yet. I have a few questions. You wrote: I actually established a synth long in SUNW, as follows: short puts 03 105 @ 26.00 long calls 03 105 @ 40.50 Net debit is 14.5, I have about 29 months to cover it: 14.5 / 29 = .50 per month to pay for position (not counting any beneficial short put value decay), but of course the put assignment risk is still present should SUNW get ugly. 1) I didn't see any mention of common shares. Was this position created with the 50% margin after your initial SUNW common purchase? If so, what protects you from a margin call should the price of SUNW common suddenly drop? I am willing to take that risk, as I think SUNW will be higher than strike 105 + net debit 14.5 = 119.5 by 03. 2) I agree. So the purpose of the collar you created, prevents your margined options postion from jeopardizing your margin limits. Correct? I think the main difference* between these positions (DIM, common on margin, synth long) is leverage, and DIM position risks a bit less than the other positions.* 3) The difference between your position and the strategy mentioned in the article, right? Or are you comparing your ATM positions to similar positions that are DIM? Your method uses ATM Calls and Puts. Where did the DIM come from? 4) Would these call/put positions be a long term hold for you providing that SUNW continues to climb at a steady pace? In other words, you would plan on executing them upon expiration. Right? 5) I assume you would buy equal dollar amounts in the Calls and Puts. (As opposed to equal number of contracts.) 6) Over time, could the difference between the Call/Put premiums ever get grow greater or smaller in a way that would decrease your profit potential? 7) If your Puts are assigned, have you allotted a certain amount of margin to cover this? 8) Have I missed any key points? If all goes well, your margin and sale of the intitial puts will fund this for you. You are using other peoples money to create this future common position. Correct? 9) Would this strategy work with a more volatile stock? Chances are that the Puts would get assigned, right? Thanks for your answers and time in answering my questions. You have been a big help. I'm learning a lot from you people. -Clappy