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

To: FR1 who wrote (4734)	11/11/2001 4:36:22 PM
From: Timetobuy	Read Replies (2) \| Respond to of 99280

I don't remember hearing anyone calling for rate cuts that early. In fact I remember everyone thinking that the techs were immune to rate increases. I do agree, he should have cut earlier. But now we have long rates coming down and that is what will be key to turning the economy around along with tax incentives and inventory burn off. I couldn't follow what you were saying on the option trade so let me make it more clear: What I WOULD have done on brcm (I didn't because it had broken to new lows and my thesis is new lows beget new lows, so be careful bottom fishing, hence, don't go aggressively with options) and therefore only bought shares at 20: Buy options with some time, probably a few months at least. I'm guessing the options would have sold for around 18 or so, maybe a little more or less depending on the month. To exercise those requires an additional $5. The total cost is 18 + 5 = 23. I actually sold my shares at 30 but had I thought that the stock could get back to spring highs I obviously would have held the shares. Had I bought options, I likely would have sold them as a trade because I didn't really think it was going to go higher. Had I thought it would though, this is what I would have done: Sell half the options when brcm hit 40. That's near enough to spring highs for me. There would have not been much premium left in them even with time. That leaves me 35 per share on half the options I'm selling. But I only paid 18 or so which is a approximately what I paid for the whole lot. (I'm down a little bit of money on them, but now I have half the deep itm options and got them for not much money). I'd have to pay 5 per share to exercise the rest of the options. Using your 4 contracts: Buy 4 at 18 = 7200 Sell 2 at 35 = 7000 Exercise 2 at 5 = 1000 Net cost (minus commissions and exercise): 1200 That works out to about $6 per share or so minus taxes and commissions. I can easily make that back selling calls. Of course this is hindsight. Had I known it was going back there that is what I surely would have done. Now I don't own brcm. If it should pull back to the low to mid 30 area, I'll probably buy deep itm options (maybe Feb. 15's). Only now since I know that it has enough power to get back to the spring highs, I'll try to buy THREE times the number of options that I'd like to exercise. The math (I'll use 30 contracts to simplify the math): Buy 30 at $20 = $60,000 Sell 20 at $29 = $58,000 (assumes the stock gets to $44) Exercise 10 at $15 = $15,000 Net cost (minus commissions/taxes): 1000 shares for $17 I'm not convinced that brcm will go over the spring highs. By Feb. we'll know for sure. If it remains range bound, I'll just keep doing this same scenario and selling calls on the shares I own in the mid 40's. Net, net, the shares will be accumulating at a nice cost basis and calls will pay for some new shares. It works in an uptrending market (buy low, sell high) and a range bound market. It doesn't obviously work in a downtrending market. I hope my math was right on those options. If not, I'm certain someone will point it out. As far as amgn goes: I haven't looked at it in a while. The last time I thought about it, I think there was some kind of squabble with JNJ over procrit or some such thing. It's been in a large trading range. Probably a good trading stock with good institutional support. If someone was out saying they love Idph, probably a good time to buy puts! Seriously, I do like idph, but it's pretty high up here. I'd buy on a pull back, but be prepared for some wild activity depending on monthly sales of rituxin or news on zevalin.

To: FR1 who wrote (4734)	11/11/2001 8:47:07 PM
From: Timetobuy	Read Replies (1) \| Respond to of 99280

I bought Disney because it's got Real Estate, a franchise with a name (happiest place on earth, Mickey Mouse, etc). As such they have their hands in educational software, travel/tourism (theme parks, doggie Angels which may some day actually win a series, although I'm not sure it helps attendance out west anyway, but may get sold off, Mighty Ducks, hotels), a tv station, extensive video collection with lots of new kidlets as customers for classics born every day, disney merchandise. Internet was a dud for them, that is true. But they can improve on that. I really haven't looked at AOL. I never cared much for Steve Case and Bob Pittman. Always kind of felt the stock was "hyped" with extensive stock splits. But they do have hard assests and captive net subscribers, movie, videos, etc similar to Disney. I have no opinion on the stock. I like Disney here though. Probably doesn't do a whole lot unless the economy shows some life, but that's ok by me. It can sit here and base for a while.