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Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: Joe NYC who wrote (73034)	3/3/2002 10:01:46 AM
From: andreas_wonisch	Read Replies (3) \| Respond to of 275872

Joe, Re: What do you do when the stock goes up, let's say to 17.50 0r 20? I haven't really come up with the right strategy to deal with that situation. That's the problem when writing CC: You give up potential upside wins for downward protection. If there was a failsafe strategy to get downward protection without sacrificing potential upside everyone would be using it. I only write CC when I am willing to sell the stock at that price (e.g. after a stock surge when I am inclined to sell) or I only write for a portion of my holding CC. BTW, Elmer's strategy has many flaws IMO: In AMD's case the stock could go down a lot more ($8-10 seems to be the bottom of AMD's trading range) and he would lose up to 40% of his initial investment. And of course the stock could surge to $20 and Elmer would have to settle with only a tiny profit in the 5% range. Also the choice to buy stock and sell March 15 Calls after the stock had already surged $2 from the recent low was bad timing IMO. And for only 0.45/contract he had to sell a lot of CCs for commissions not to eat too much into his gains. Andreas