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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: James Clarke who wrote (3205)	3/1/1998 6:11:00 PM
From: Allen Furlan	Respond to of 78567

Good book but could have been a great 20 page nomograph. Food for thought. If principle of long term holding of contrarian stock is accepted, then a ratio write strategy using leaps makes sense. Example last month bought shares of esst at net price of 5 by writing 3 January 2000 (strike price 30) calls per each 100 shares. Expect stock to take quite a while to recover. Call ratio write accomodates concept that picking bottom of contrarian stocks is very difficult.This strategy establishes a very favorable acquistion price and allows you to write options several hundred percent out of the money at decent premiums. Have been doing this sucessfully with smaller ratios(usually 2/1) for 6-7 month options.