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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study! -- Ignore unavailable to you. Want to Upgrade?

To: Linda Kaplan who wrote (6101)	12/12/1997 8:48:00 AM
From: Herm	Read Replies (1) \| Respond to of 14162

Wow Linda, Let me stop here and take a double dose of MUSE and seriously pray to my Lord for annoting with the wisdom to be able to begin to address your situation with my limited common sense. Surely, this must be a hint or reminder for me and others of what can and does happen! You are not alone Linda. With that out of the way, let me make sure I'm understanding this correctly. Two questions: Question #1 - Those Oct. and Dec. option months are LEAPs for 1998 or 1997 calls? Question #2 - Are you holding any other stock positions at this time?

To: Linda Kaplan who wrote (6101)	12/12/1997 9:28:00 AM
From: Greg Higgins	Respond to of 14162

Linda Kaplan writes: I'm holding 1100 shares of VVUS at an average price a little over 30. Bought on margin and causing margin calls. As far as I can tell, your brokerage firm now owns all your VVUS shares. You borrowed 15K on margin, and the stock is worth about 15K. What you need to do is take action to insure the brokerage firm does not sell you out incorrectly to get it's margin back. It need not sell your losers to pay off the margin, it could sell your winners. If I were you I'd 1) Sell my losers (biggest ones first). Keep the Mar 35 calls, they're worthless, but they can't be used for margin anyway. You may get lucky here some time in the future. 2) Stop buying options. 3) Stop buying on margin. 4) Invest in some income stocks (probably REITS) as a way of getting some return back. 5) Cut down on all personal expenses (credit cards, especially). 6) Increase my savings rate. It sounds like you have done serious damage to your financial health. May guess is that if you look at it rationally, you'll see that you've been gambling. You need to stop gambling. It may take years to recover the 30K of losses you've shown us. But if you keep on the way you're going, you may lose everything. Is it worth the risk? The market traditionally returns 10% / year. The last few years have been an anomoly. You need to learn how to match the market before you start trying to beat it.

To: Linda Kaplan who wrote (6101)	12/12/1997 5:18:00 PM
From: Herm	Read Replies (2) \| Respond to of 14162

OK Linda, Your other message in the second paragraph saids it ALL! You have other stocks in danger that you are holding and you have margin calls! How do you spell relief? Rolaids won't do it Linda! EMERGENCY DAMAGE CONTROL! 1. Hang up (liquidate) enough of the losers and consolidate your remaining resources to make your margin calls as soon as possible. If that means cashing in one or two stocks to make the nut, so be it! DON'T add any additional monies out of your pocket PERIOD! If you have any stocks with anything less than 300 shares then dump that! The commissions for CCing is not worth it and won't help you much to generate income at this point! The margin rope is about to snap your neck! You will be lucky to only have a rope burn tatoo around your neck. 2. Please take the time to calculate EXACTLY what your net cost basis is in ALL of the remaining stocks after you liquidate the selected stock(s) as indicated above. Check out the freebee spreadsheet to assist you with that task at webbindustries.com. Normally, that would be the very first thing I would suggest to anyone considering CCing to generate additional income or being defensive by writing at the money CCs. But, we have a financial crisis to deal with called margin call! 3. Let us know when you have completed the above suggestions and you are out of the margin call deadline. 4. Please be prepared to list your stocks, number of shares and net cost basis (nut) for each. It would be financial suicide to proceed with CCing without that information. The idea is to start generating income to recover your losses. That may take a heck of a long time! But, it is possible to survive this tragic experience. In closing, you may want to consider investing in a good mutual fund if your health is going to suffer from this recovery period. You must be willing to learn from the mistakes made. Furthermore, you will need to very closely assess your behaviors in order to avoid a repeat in the future. Ask yourself, is this a pattern in my behavior? Or, is it a freak sequence of events? Only you can answer that in order to grow! No Pain, No Gain! That's my two-cents worth! Anyone else wish to comment?