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: mitch-c who wrote (43834)	3/16/2001 9:00:20 AM
From: Jerome	Read Replies (1) \| Respond to of 70976

Possible Option Strategy for the next month******* I'll start by saying that its totally indeterminate as to where stocks are headed over the next five weeks. A week ago it looked like I would get called out of a whole bunch of stuff. LRCX at 25, NVLS at 45 etc. Given the weight of daily bad news and little likelihood of a reversal on the short term horizon, is little. The put call ratio is so negative that for a while it may work against the longs. If the imbalance is so heavy on the put side, it would take a huge amount of buying for a reversal. I'm normally 95% to 100% invested in the market at all times. No matter where the DOW or the Nasdaq is I expect to derive a certain dollar amount of income from covered call writing each month. Its easier if the stock prices are higher but rent comes due each month no matter where the Nasdaq hangs, flies or slides. Sitting on the sidelines is just not an option. There are two major influences on semi-equipment stocks that take place next week. A cut in interest rates from the Fed is one and at best will result in short term rise. The second is the Semi BTB which will show an alarming decrease in bookings if I read the press releases correctly. Instead of buying back in immediately on Monday as I normally do with AMAT, LRCX and NVLS I will wait until an exact price is for these stocks is achieved. For example: If NVLS closes today out at 43 I will wait until it hits 46 1/2 and then write the April 45 covered calls against it. This should net about $600.00 in premium for 100 shares.The other way of doing this would be to buy NVLS at 43 and wait until it hits 46 before writing the covered call. This would be more profitable, but given the extreme negativity in the market I'm not betting that any stock hits any price in the short term. For LRCX I will do the same. When LRCX hits 26 write the 25's for April for $300.00. For AMAT a little different variation. When AMAT is at 48 or 49 write the 50's or at 46 write the 45's. This is where looking at the charts gives some clues as to what could happen. If you are right its an educated guess, if you are wrong....... plan B for next month. Best I can do for now.... Jerome Note: a whole post without political comment.... thats tough for me