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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets! -- Ignore unavailable to you. Want to Upgrade?

To: Jacob Snyder who wrote (9035)	11/30/2000 3:03:21 PM
From: Sam Citron	Respond to of 10921

Jacob, Is it really prudent to reject a 100% return in two years as insufficient? I believe it's misleading to compare a 100% return selling covered calls to a 4000% return buying out-of-the-money LEAPS because the risk characteristics are totally different. If AMAT gets down to 28, you might be lucky enough to buy, say, 15 month calls with a strike of 70 at around $2. If you time it just right and AMAT gets to $150 in a year, you could again achieve your 4000% return. In fact, you could use some of the covered write premium to achieve this. What I am suggesting is that the Jan '03 70 calls that you could write for $10 might very well decline to about $2 if AMAT gets down to 28 in 8 months, and that would be an excellent time to cover a short position in such covered calls and go long. One thing is certain: you will not get a 4000% return on your money in the stock alone. Sam