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To: Clappy who wrote (29412)	8/17/2000 10:24:22 PM
From: Dutch	Respond to of 35685

QQQ pays 5% atm every month, good conservative cc strategy. Dutch

To: Clappy who wrote (29412)	8/17/2000 11:10:07 PM
From: Sully-	Read Replies (2) \| Respond to of 35685

Hi clappy, <<1) How do you buy back if you already used that money for your monthly income? If you are contemplating the vehicle to be your sole source of income, you should not put yourself in a position where you start form the get-go using up 100% of available capital, plus all call premium. If you are going to take the plunge & live off the premium from the vehicle, I think you need to leave sufficient dry powder to be able to uncover, plus some $$$ in case there is less call premium due to your vehicle going into the crapper. Uncovering generally should not cost too much if there is almost no intrinsic value left. Further, you should initially live off of only part of the original premiums generated when you start out; Just in case your vehicle jumps into the crapper like many NAZ stocks did this year..... Build in a little saftey factor & live to drink Dom another day me thinks. 2) In EXTR's case you may have to roll out for several months or longer. You still need monthly income. What do you do? HMMM, I am no expert here at all clappy, but what I believe you need to do is roll up & out to a higher strike far out enough to pay for the loss on the CC's that you need to buy back plus provide you some $$$. Again, if you just are starting out at this, I would strongly suggest that you leave some powder dry, plus try to situate yourself to live from less than 100% of the initial buy/write income. It will allow you to avert disaster if your vehicle takes a crap on you when you need it to be paying you. If you leave yourself a little room & suddenly, chit happens, you can work (very key word - work) your way through this mess. Unfortunately, events like this can be quite stressful if you are not prepared with some dry powder or $$$ stashed away or you are not prepared to act on your vehicle to save it & make you some $$$ in the process. Now you have rolled up & out & have some $$$, but not enough to live on for now. You may have to dip into that dry powder, or dip into that portion of prior premiums you set aside previously for when this unfortunate event happens. If the stock continues to run, you may let it get called & start over.... or roll up & out again.... your underlying equity is growing nicely if that happens, plus you are still generating income, albeit not the same as if you never had to chase it down the crapper..... One the other hand, maybe your vehicle doesn't continue go up, but turns back south. You uncover the CC's & re-write at the money - use the money for income, or to lower your cost basis.... or a little of both. Clappy, when your vehicle taks a crap on you in a big way, you need to make tough decisions & maybe tighten the belt for a while. You should certainly have a little dry powder set aside in the off chance that chit happens. However, if I understand Voltaire's thoughts on this, you should be able to generate income & protect your vehicle fairly well if you use CC's in this manner. The key is to not go 100% margin & spend 100% of the income from the get-go. Then you can work your way thru another tough time like many stocks have had this year. Geeze, I hope I am not screwing this up.... OOF :-\| Tim