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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Voltaire who wrote (3375)	9/24/2000 12:46:02 AM
From: adairm	Respond to of 65232

Volty: I'm guessing RMBS. I got some nearly free RMBS last year. I sold ATM RMBS '01 LEAPS puts and used the proceeds to buy ATM RMBS '01 LEAPS calls. The premiums were almost exactly even. My only out of pocket costs were the commissions, and on ETrade, they ain't much. Us real estate folks like the "no money down deals". Yeah, this was a Casino ride, for sure. Pure E ticket. But in February, I closed out the short puts when they went under a dollar. I mean why hold 'em and tie up my margin when all I could make in 11 months was $1 per share? Now, this left me with 'free' Jan 01 options. In June when the Hitachi deal went down, I excercised early. I used some margin to exercise my calls. The time value was again virtually nothing, so why wait? I increased the equity in my trading account enormously! (Etrade doesn't consider options, even options wickedly ITM as equity.) Sorry, but I'm not going to cover my RMBS with short calls. I'll just let this one happen. All the best, Adairm@Iwishtheyallworkedthiswell.com