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Strategies & Market Trends : Gersh's Option trades -- Ignore unavailable to you. Want to Upgrade?

To: Gersh Avery who wrote (598)	10/14/2005 11:18:41 AM
From: Joe Waynick	Read Replies (2) \| Respond to of 652

Hi Gersh; It’s actually quite simple. At 13% ROI I need 8 premiums to own the stock with the market’s money. I can buy half my target position and sell CC’s and write naked PUT options on the other half over the course of 12-18 months to get into the stock using OPM. Three things can happen: 1. The stock could go up, in which case I’m exercised on my position, but I keep all the premiums. I will then continue selling naked PUT options until I collect enough premiums to buy a position with OPM. 2. The stock could go down, in which case I’m assigned the stock. I still keep the premiums and I own a company at a lower cost basis than if I purchased the stock outright. I continue selling CC’s (maybe LEAPS) at strikes that ensure a 25%-50% annual return if exercised at some time in the future. 3. The stock could channel, in which case I continue selling CC’s and PUT options until I collect enough premiums to buy a positions with OPM. It’s a stress free way of picking up great values in companies I like and want to own long term. Joe