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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Gottfried who wrote (42469)	2/21/2001 11:39:15 PM
From: Jerome	Read Replies (1) \| Respond to of 70976

*Option Strategy For Rangebound Stocks** Lets look at three stocks that for now are trading in rather predictable ranges for the past few months. 1) AMAT between 40 and 50. This stock does not want to stay either above 50 or below 40 for any prolonged period of time. 2) NVLS Again rangebound between 38 and 48 3) LRCX Staying in a nice range between 21 and 27. I have no idea where these stocks are headed. All three companies have good futures. But if individual investors and institutions continue to hate tech stocks these three companies will fare no better than any other hated tech stock. Its also possible that these companies could double their earnings and sales and still be in the same range that they are now. After visiting other tech stocks discussion sites, (CSCO, SUNW, DELL, INTC, NT, JDSU, CPQ, ORCL) the verbage is remarkable similar. All maintain that we are in a temp. sell off that will resolve itself in six months or when the Fed cuts interest rates another 1%.Something tells me that these posters have never seen a prolonged bear market for tech stocks that lasted more than 9 months. But if these three stocks are rangebound, and there is no end to techstockphobia, we still have to make something out of what we have. I have no intention of waiting around for 6, l2, 18, 24, or 36 months to find out where AMAT, NVLS and LRCX are headed. I suggest writing covered calls against some of your AMAT shares when the stock hits 46 (write the 45's one month out). With NVLS when it hits 45 write the 45 one month out. and when LRCX hits 26 write the 25's one month out. Even if you get called out each month you will have more cash to reallocate to this same group next month. If you are concerned about a call out use a higher strike. This is my strategy and I do follow my own advice. If some thread viewers have a better strategy lets hear it. I did figure out a perfect hedge on AMAT using calls and Puts but the net result was a ZERO gain or loss, so there is no need to trouble the thread viewers with this dubious achievement. Jerome