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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: Andrew N. Cothran who wrote (121024)	6/26/2002 8:46:56 PM
From: Stock Farmer	Read Replies (1) \| Respond to of 152472

Andrew, in all of that writing of CCalls on QCOM, were you ever called out? John.

To: Andrew N. Cothran who wrote (121024)	6/26/2002 8:58:34 PM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 152472

hi Andrew, I have taken much more off the table than my original investment good to hear that. i also had a QCOM investment, consisting of 100% calls for 100% of my portfolio, through most of 99. the results were very good. will continue to sell covered calls against my position in order to derive income in lieu of dividends. just my opinion, but i don't think CC's should be at all likened to dividends. i am sure you know the difference, but dividends come from the company and call premiums from the market, as a function of the stock's volatility. the problem is, call selling is only the best strategy when a stock goes sideways. if the stock goes up, then CC's cap the gains. if the stock goes down (rather quickly, like QCOM, which has lost more than half its value in less than a year), then call premiums are not as good as just selling the stock. i don't like to talk about dividends and CC's as similar because it can lull one into thinking it is some kind of reasonable strategy. for example, you said the call premiums alone reduced your basis to below zero. that may be true at $27, but what if you had sold all your stock at $130, where you said you sold some? were you able to take down $130 in premiums? probably not. (fwiw, i sold QCOM at various prices between 152 and 110, for an average of around 126-7 in the spring of 00.) certainly, if you received $27+ by selling calls on your remaining stock, that is a heckuva lot better than having received nothing, but it's not as good as what you did with the first half which you sold. but that is just in the downtrend phase of the stock. we are all pretty sure that phase will end eventually. so what about the uptrend phase? if i were exceedingly bullish, i would not want to be short calls when that comes (even though i think the bottom will be lower than most longs do). btw, i also have covered calls on QCOM now, as it happens. but i did a buywrite where i bought the stock (around 28-29 as i recall) and sold the Jan 20 calls against, for a net debit of 18.30 or so (capped at 20). this is my own version of trying to capture some of that beta on the calls, although in my case, i set the (then) lowest strike price because i am still quite bearish on the stock (in that way i would distinguish myself from "bullish" call sellers). but i considered it an OK risk for a 9% return. if QCOM goes down further between now and Jan (e.g., to 15 or so), i will probably just sell the 03 or 04 15-strike or lower to reduce basis further. interestingly, the net debit now available on the Jan-20 buywrite is quite a bit higher than when i wrote it a couple months ago.