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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: FR1 who wrote (39085)	2/8/2001 1:18:56 AM
From: Uncle Frank	Read Replies (1) \| Respond to of 54805

>> I hold puts on each share of JDSU QCOM AMCC and the like that I own. What do you think of this strategy? When we have huge dips like we did on January 2nd, it is a spectacular ploy - the perfect hedge. But... >> I buy month-to-month puts for each stock I hold. it's extremely costly insurance. I looked up the prices for just out of the money March puts on your 3 stocks and came up with the following: STOCK 2/7 STRIKE COST % JDSU $48.25 $45.00 $3.88 8.0% AMCC $49.81 $45.00 $4.50 9.0% QCOM $86.63 $85.00 $6.63 7.6% If the underlying stays flat for 6 months, you've spent about half the value of the stock in premiums. Personally, I lean towards writing covered calls on long term positions. It's not as good a hedge, but the premiums are always flowing in my direction. And if I were buying protective puts, I wouldn't focus on the front month, since the time premium cost per month is much less expensive for multi-month puts. jmho, uf