Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: RocketMan who wrote (29982)	8/21/2000 2:55:54 PM
From: im a survivor	Read Replies (1) \| Respond to of 35685

<<After working through some examples, I think it is best to sit out CCs unless one believes the stock is in an uptrend. >> Actually, I beg to differ slightly. First, we must all understand that as a part of CC writing we are all incorportaing this into our own strategies. There is no book...no rules set in stone. Me personally, it all depends on what stock and what my current perception is. If I wrote currently on elon, I would buy and write immediately ATM or a tad OTM. With a stock like rmbs, which I feel could have some serious mo mo, I prefer to try and go alittle more OTM and catch some of the stock appreciation. I may go ahead and write immediately upon buying for a lower premium, or I may hold out a day or two and see if we get a few dollar rise, and hence a higher premium on an otm write. As far as the point that I said i beg to differ.....this works not only with stocks going upward, but it also works great with stocks sitting sideways. Picture DELL. Many of us were in dell.Many of us did very well. Eventually the stock hit a wall and pretty much stagnated in a very constant range, for quite a long while ( still is ! ). Well, some of us knew when to bail, some didnt. Some bailed on some, some bailed on all, some bailed on none. I was one of those folks that eventually bailed, but wanted to keep a couple hundred shares....well, because it's DELL...and one day........anyway, I kept those couple hundred shares. For a year or year and a half, they sat and did zilch, while the market ran wild. Had I only known then what I know now....I could have written 2 contracts a month while dell sat stagnant. Each month I would have collected $3 - $4 on each contract, and each month I would have kept my shares. Think about that---- for 18 months I could have collected $12,600.00 to just let the stock sit. At an average of $3.50 per contract, 2 contracts permonth.....$700 month for 18 months...and heck, I could still be sitting here writing them cause dell is still stuck in this range. Now, those 200 shares priced at $38 is $7600.00. By letting that $7600 sit and writing against it, I could have added a "free, please help yourself", extra $12,600.00 to the tally...and again, could still be adding monthly as we speak. Of course, I didnt do that, as CC writing was not part of my basic strategy then, but oh, how I wish it was. Another example....Look at V's BEANO example with qcom. While qcom tanked everybody lost, but whichever beano or bobo or whoever was writing CC's, came out much, much better, and currently sits much much better. Additionally, with qcom being rangebound the last few months, it has been an excellent example of collecting an easy $650 extra each month for eacvh 100 shares you own...do that for enough months, and belive me, your making plenty of money on a stock that just sits and idles. anyway.......have a great afternoon.....by the way. I said goodbye to qcom today. All I own now are qcom 2003 leaps. I picked up rmbs again and added more ssti. keith@crazydays.com