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.

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

To: Jerome who wrote (42975)	3/3/2001 1:31:18 PM
From: Jacob Snyder	Read Replies (2) \| Respond to of 70976

re: AMAT covered calls: I prefer to "play the range" by going long at the bottom of it, and going short at the top. This will make me a lot more money than staying long and writing CCs. On the last dip and rebound, I didn't play AMAT. Instead, I bought TXN calls on March 1, and sold them March 2 for a 43% profit. Eventually, I will go long AMAT, and stay long till the stock is over 90. But, even then, I'm not sure I'll be selling CCs. AMAT is a very volatile stock. It may bounce along a trading range at the bottom for months and months. But then, when it goes back into favor (because of news that Fidelity Tech Fund managers hear before I do), the stock will abruptly double over the course of a month, and then keep on going up. So, if I'm selling CCs, I'll lose my stock just as the stock is taking off. After all, the reason to hold the stock is because I think it is going up. And, if I chose strike prices high enough so I won't lose my stock, I won't make much money from the calls. But, from what I've heard, writing CCs is one of the few option strategies that usually makes money.

To: Jerome who wrote (42975)	3/4/2001 1:43:36 AM
From: Larry Ames	Read Replies (1) \| Respond to of 70976

Jerome, Appreciate your discussion about covered call writing: "A real life example. Two months back I bought 500 ATML at 16 3/8 and immediately wrote the 17 1/2's In the course of the next 6 weeks I have written the 17 1/2's, the 15's and the 12 1/2's. Each time I got at least 1 point for the option and undid the option at a price of 1/8. " What do you do if you get called out at a low level when you may still have a net loss for the series of call/writes? Do you rebuy the stock at the lower level and keep writing calls? Thanks, Larry