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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: MileHigh who wrote (64373)	8/7/2003 12:11:34 AM
From: RetiredNow	Respond to of 77398

MileHigh, you are another one of those lone voices crying in the wilderness. Don't even bother. Some folks are convinced that daytrading, options investing, and a whole host of other thinly disguised gambling methods are actually ways of investing. I long ago stopped trying to convince anyone that slow, steady, diversified investing is the only way to go, if you are serious about investing and being able to retire with the proceeds.

To: MileHigh who wrote (64373)	8/7/2003 12:31:45 AM
From: Ira Player	Read Replies (1) \| Respond to of 77398

actually you are trying to put a precise value on CSCO on the 3rd FRI of the month--stupid IMO What are you talking about? We are in no way trying to put a precise value on any stock at any time! Additionally, anyone doing covered calls on an equity they would not own otherwise is making an error. Selling calls against a stock is nothing more or less than renting an asset with the right to buy for a period of time. For the "rent" you receive a premium. If, for example, you bought CSCO at the close today at $17.65 and simultaneously sold the Sept $17.5 call for $0.95 (Not something I would do, just an example), you have in effect bought CSCO for $16.70 and have accepted an obligation to sell it for $17.50 within the next 43 days. If called out, that's an ~4.8% return in 43 days, a 45% plus annualized return. This trade is profitable to the trader anywhere above $16.7, ANYWHERE ABOVE. The stock buyer without selling a call is only profitable above $17.65! If the stock is below $17.50, you are free to do it again. If it is above, you can "roll them out" to a future month at a higher strike. Again, for example, if you had sold an August $15 on CSCO previously, you could buy it back at the close today for $2.70 and sell the January $17.5 for $1.80, a debit of $0.90. However, since you still believe in CSCO, you will have recovered $1.60 of your "lost" gain by performing this recovery technique. (I would not recommend always performing "roll outs", but it is often a good strategy for a stock you do not wish to sell.) Don't be so negative on strategies that are different than your own. There are many ways to make money out there. Enjoy the ride. Ira