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Gold/Mining/Energy : Friede Goldman Halter (FGH) -- Ignore unavailable to you. Want to Upgrade?

To: Yogizuna who wrote (135)	3/12/2001 4:40:27 PM
From: Mark Adams	Read Replies (1) \| Respond to of 177

Tomorrow should be interesting. Until late last year- everything I did was in round lots or multiples of. Then I explained my risk mgmt strategy to my brother, complaining that for higher priced stocks, I could not effectively average in over time, as I have a position limit on individual stocks and sectors, that in some cases more than a single round lot would exceed. AMAT for example. The next week, I started using 50 share foot wetting positions instead of 100- mostly for the highest risk plays. Once I hit 100 shares, what I consider a minimal entry level, I start adding in round lots. And even though the commissions eat into returns this way, I'm more comfortable given the macro circumstances. If we start a bottom searching process, I'll repeal the 50 share mode- except for things like brkb <g>. Regarding writing calls- I've done it on three positions now. I worked this in 95-96, using 500 share lots. Setting up a play would require committing 10k for a $20 stock. After getting some experience, I quit. I found it easier to pickup a few hundred shares at a time, legging in as Michael Burke described, and just trading some of the shares. Recently- the higher volatility on some calls combined with stocks reaching prices I'd be willing to part with prompted me to resume selling calls, much as you describe. What I'm really doing though, is buying risk and selling volatility. I believe that if the general public reaches a point of 'disgust' with shares, that volatility will decrease and the risk will be priced in. That would be the season to write naked puts on quality companies, or sell calls on shares already owned that approach what I consider a fair value, as an income ploy. I'm not ready to buy stocks to write calls, as I did when I first started. I just sell calls on stocks I already have, purchased at lower prices, that I don't mind holding and don't mind selling.