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

To: bacchus_ii who wrote (73056)	3/3/2002 10:42:24 AM
From: TGPTNDR	Read Replies (1) \| Respond to of 275872

Gottfried, Re: 2) The most frustrating part is when you have such position (short put or CC) you lost freedom of trading the shares. It's the reason I couldn't jump in when AMD was below $8, a lifetime missing opportunity. Not so, IMO, depending on your position(short put or CC). If you were short puts, though you have to decide how deep you want to go in the underlying equity and how much leverage you're willing to take on in support of your intellectual position. If you were long CC, the clear winner would have been to cover them. (Easy to say in retrospect.) tgptndr

To: bacchus_ii who wrote (73056)	3/3/2002 2:45:40 PM
From: niceguy767	Respond to of 275872

bacchus ii: "I agree with you on those remarks. After having used this strategy for almost 2 years, I would add those observations: 1) This technique reduce lever for playing the market. 2) The most frustrating part is when you have such position (short put or CC) you lost freedom of trading the shares. It's the reason I couldn't jump in when AMD was below $8, a lifetime missing opportunity. 3) The best advantage is you don't need money in your account to make initial position(selling PUT). You need margin from other position though (e.g. bond position)." You are obviously seasoned in this particular strategy as indicated by your comment #2...Just no fun to be in that position, a position, which is indeed a realistic outcome of repeated utilization of such a strategy...No one strategy is failsafe...The major flaw in CC strategy is it does not protect the investor in a prolonged sliding market, just as the much touted bear strategy of writing puts brought to us by Elmer 2 years ago, does not protect the investor in a prolonged bear market...

To: bacchus_ii who wrote (73056)	3/4/2002 2:12:35 PM
From: Joe NYC	Read Replies (1) \| Respond to of 275872

Gottfried, 2) The most frustrating part is when you have such position (short put or CC) you lost freedom of trading the shares. It's the reason I couldn't jump in when AMD was below $8, a lifetime missing opportunity. CCs introduce a bit of a mental paralysis. But it is mostly self inflicted. You can always close the position and "free" the shares (in case of CC). Lately, I tend to buy back CCs when the stock (and option) moves lower, when the stock goes back up, I sell CC again. Joe