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Non-Tech : The Critical Investing Workshop -- Ignore unavailable to you. Want to Upgrade?

To: Mannie who wrote (26816)	7/27/2000 8:16:13 PM
From: Voltaire	Read Replies (1) \| Respond to of 35685

Hi Scott, I will use the example of my Write yesterday. Needed cash for Airplane expenses because of some upgrades I had made and did not want to spend a part of my Vehicle. Bought 5,000 shares of ELON and wrote the Aug. 35's. for and average of about $6.25 and slightly in the money. If ELON goes down enough that there is no longer any INTRINSIC value left, I will rewrite at the money. REMEMBER, the only time I write calls for INCOME OVER DOWNSIDE protection is in the instance above, the rest of the time it is for downside protection of both my purse and my sanity and then and only then do I count my premium. So getting back to WHEN to rewrite, it is simply when the INTRINSIC value is basically not offering enough protection on the downside. If the stock starts back up and I see a constructive reversal, I will buy back my calls by rolling up and gradually doing what I call a squeeze by getting further and further out with my write until it will eventually die a natural death by not being called and I at least get my original investment back. One thing that goes unnoticed by a lot of writers that write calls on stocks that can basically be counted on to appreciate like a CSCO etc. is that buying your calls back on a stock that is appreciating and you never sell is that you are creating a short term capital loss that can build and build over time to offset any other gains one might have. V