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Technology Stocks : Full Disclosure Trading -- Ignore unavailable to you. Want to Upgrade?

To: Cary Salsberg who wrote (5686)	5/30/2003 7:53:07 PM
From: Sam Citron	Read Replies (1) \| Respond to of 13403

Cary (I'll skip the OT since it's not needed while the mkt is closed), That's a great answer. It highlights the richness of investment alternatives that we face every day. Not that these are strictly alternatives. One could certainly do both, as selling the puts is a cash generator, although it consumes available buying power in my margin account to maintain the position. Here's an idea that I touched on earlier in a private communication. Now that you have made a Jan '05 prognostication of $60, I can flesh this idea out with a bit more succulent detail. If you are correct, the Jan '05 35 call should rise to $25 from their present price of $5.70, providing the 300% return that you prognosticate by Jan '08 in only one third the time. And I can do so with a minimal direct cash outlay of $2,600 for 20 calls, as I have just generated $8,800 in put premiums. If you are right, those 20 calls will be worth $50,000 in Jan '05. As you alluded to earlier, such a strategy is certainly conditional upon the timing of the recovery, but what isn't, Rip Van Winkle? Don't forget, you could die in your sleep, Mr. Buy and Hold LT investor, but that's a risk I wont address right now. [Sorry, I have been meeting with hospice workers all afternoon concerning my mother, and Keynes words that "in the long run, we're all dead" have a certain poignancy for me right now. One other point: I do happen to have $30K to spare that I could allocate to this investment if a compelling enough case could be made. In fact, I had 1200 shares which I sold last month in the 25.5 region. I took very small profits on the position after being underwater for many months. That urge to breakeven on a losing position is really a very negative self-fulfilling prophesy all tied up with ego, and has nothing to do with successful investing. If nothing else, that is an important lesson I have learned from this miscalculation. Investment is a constant battle with one's ego. "If I can get back in below 25.5, then I did the right thing by selling, but if it doesn't and goes up to 120 as you predict then I will feel like a total idiot if I don't participate." See how nonsensical this inner dialog is. That's another reason I tend to like the LEAP approach. There is an enforced discipline that keeps you from deviating from the plan because there is a natural endpoint at option expiration and minimal incentive to deviate from the plan. The risk reward seems very favorable too. The only big disadvantage that I can see is that with leaps it's a ST cap gain, as opposed to LT cap gain on the stock. You were the first person to patiently explain the virtues of AMAT to me. Ditto ALTR, XLNX, LLTC. Of all the investors on all these threads, I have found your counsel to be the most consistently rewarding. I await your comments. Sam