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

To: waverider who wrote (10745)	12/11/1997 5:49:00 PM
From: jimleon	Respond to of 77400

All, Try this strategy if you like CSCO, but have no idea where the market is headed (which is everyone). I am betting on CSCO doing well in 98. I am long 500 CSCO, but also own 5 JAN 99 LEAPs with strike of 80. The leaps cost $1200 each when I bought em, and that is what I am really risking. 40k of stock is owned, but you are really risking the 6k puts. If CSCO tanks down to 30-50, you exercise the leaps to recover the 40k. If csco goes to 160 this year, I make 40k less the 6k insurance spent. If CSCO triples I am up 80k less the 6k insurance. You can sleep at night and take a big position in stock. It is better than selling now and taking a huge tax bite for those of you who have made a fortune in CSCO. You can also sell calls to help pay for your insurance. Jim