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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets! -- Ignore unavailable to you. Want to Upgrade?

To: Cary Salsberg who wrote (9854)	5/21/2001 11:13:31 PM
From: Sampat Saraf	Respond to of 10921

Cary, I have used covered call strategy in past with 'mixed' results. One strategy I have used with ASYT, which is highly volatile, is to write Covered calls available of longest maturity with a strike close to current market price and thus capturing significant time premium. For example, currently when I feel ASYT may be short-term fully valued, I may write DEC 22.5 calls (QQYLT for about $4+/shr). This reduces the basis of shares I own and assuming ASYT goes back to teens because of its high volatility, buying back QQYLT at $1 or $2 per share will reduce my basis somewhat. The long maturity gives me six months of ASYT's volatility to buy back the option. Another strategy may be to sell in-the-money covered calls of longer maturity say DEC 15's (QQYLC) for about $8/shr thereby reducing the basis significantly. The QQYLC's price would pretty much track the ASYT's stock price. If ASYT goes down by $4, QQYLC will fall by about $3 or 4 per share. This will give ample opportunity to buy back the call at lower price. Anyway no strategy is without down side. I got stuck holding ASYT's stock and its covered calls during a 4 month period where ASYT stock almost tripled and I missed a significant portion of that gain. Covered calls are best when you are long term bullish but short term skittish about a stock, in my opinion.

To: Cary Salsberg who wrote (9854)	6/1/2001 12:25:28 AM
From: Jerome	Read Replies (1) \| Respond to of 10921

Covered calls are useful in stable situations or when the stock is close to fully priced This opinion is out kilter with reality. 1)Covered calls are useful in stable situations.... If the situation were stable there would be no significant call premium. 2) When a stock is close to fully priced........In the example given... ASYT was a good covered call write when it was 12 15, 20, 25 and 40. Its the volatility that makes a covered call an investment consideration. But as always opinions differ. Jerome