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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: Gersh Avery who wrote (52140)	6/11/2001 9:56:21 AM
From: Joe Waynick	Respond to of 94695

Yes. However, when I write naked puts, I write OTM puts and the idea is to generate cash flow not acquire stock, so getting assigned is not a certainty. I prefer not to be assigned because I only want the cash flow. Yet I don't write naked puts on stocks I wouldn't mind owning. For example, when CSCO was trading between $60 - $70, I was writing puts for many months. I had a cost basis of -$53 before it declined to $20 today. Obviously, I was assigned the stock, (at $55) but for me to lose money (other then paper profits), the company would have to declare bankruptcy, then ask me for a check for $53 a share. With $17 billion cash in the bank, I doubt that will happen. But my point is I wrote many puts before finally being assigned. And I'm still playing with the market's money. Now I write OTM covered calls against CSCO and will continue doing so until I'm finally assigned the calls to generate cash flow to the upside. Since I have a negative cost basis, there is no risk to my original investment and I'm in a "can't lose" positon. Naked writing is truly a wonderful way to generate steady income as long as you exercise appropriate capital management. Joe