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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: Timetobuy who wrote (4728)	11/11/2001 3:11:27 PM
From: FR1	Read Replies (2) \| Respond to of 99280

In a non trending market, call sellers will benefit. Right. A great place to wind up would be sitting on a large number of shares of a stock that has great dividends and trends up. You can write short term calls, collect dividends and get stock appreciation. The fed's loosening of monetary policy pre y2k probably created overdemand, overcapacity and oversupply and we're making up for that now. Yes. But the FED should have started lowering rates in April 2000 when we saw the first dramatic decline in the market and many CEOs were screaming for the FED to reduce interest rates to a reasonable rate ~5%. If the FED had not insisted on keeping the tight money policy there would still have been a selloff but it would have been more natural and based on industry demand - not FED demand. I think you meant that the price doesn't move one for one any more as it approaches the strike though. Right. I guess I was not clear. I have a question about your method. You stated that you buy a lot of itm calls and then sell some calls to buy the stock with profits. In the instance of 5 calls on BRCM, let's say you sell 4 of them. Say you bought calls 3 months out whose strike price was $15 itm. With BRCM that would give you the cost of $18/share you mentioned. BRCM was around $35 two months ago so you would be buying Dec '01 calls with a strike price of $20/share for a premium of $18/share. I assume you would sell about a month before expiration because the last month is where option premiums go to hell. So if you sold your Dec '01 calls now, they now go for $21/share. So you would sell now and profit $20 - $18 = $2/share (assume no broker cost). So you would gain $800. But the cost to convert the last call to stock would be $4,300. So I don't see how your gain from the sale of calls could give you enough money to convert even one call to shares. Of course, the method works great if you have really deep pockets and can buy 100 calls. ***************************** Incidentally, I recently heard a biotech fund manager support your IDPH and he also liked AMGN. He pointed out that AMGN has much more in the pipeline for approval. What do you think of AMGN? ************************* If you go for Disney would you go for AOL at these levels? AOL does not have theme parks but Disney has failed (compared to AOL) at the internet.