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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: freeus who wrote (34676)	3/26/2001 9:52:34 PM
From: Uncle Frank	Read Replies (3) \| Respond to of 65232

>> What stocks (with good future prospects) are profitable ones to buy cov calls on? As far as I'm concerned, there are none. I'm on the other side of the table. I write front month covered calls and sell them to dreamers who think they can triple their money in a month in this lousy market. It's equivalent to being a drug dealer with a clientele addicted to Exuberance. I'm the Candy Man for those unfortunate dreamers. About the only action I'd recommend if you have cash burning a hole in your pocket is buy-write, but only if you have the patience to wait to take your position near the bottom of a good stock's trading range. As an example, I added to my qcom core holdings on 2/28 at 52 3/4 and then wrote March 65s against it on 3/1. I wrote April 65s against the same shares on 3/20. Today the stock closed at 56 5/8, which is a 7.3% return, but the premiums I've received constitute a additional 12.3% return. And if I should get called at 65 on 4/20, my overall return will be 35.5% in less than 2 months. What worked in 1999 doesn't work in 2001, freeus, and survival in the investment jungle requires we adapt. This isn't a safe time to buy calls or even LEAPS. But its a great time to sell covered calls. Who can take tomorrow Dip it in a dream Separate the sorrow And collect up all the cream The candy man The candy man can... uf