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Strategies & Market Trends : Closed End Global and Country Funds -- Ignore unavailable to you. Want to Upgrade?

To: peter michaelson who wrote (219)	3/1/1998 1:07:00 PM
From: Allen Furlan	Respond to of 289

Korea arbitrage. Last week found ADRs just about matching makox(except skm) on per cent basis. Even then skm has not provided downside protection as yet. However here is a strategy worthy of your investigation. Sell skm calls. You dont have to worry about stock being called and you enjoy some premium income over intrinsic value. Assuming you are long term player here are two examples with skm currently at 8 5/8 and assuming you have 5,000 in makox. 1. Conservative Sell 6 September 7 1/2 calls naked at 2. I say conservative but that is only comparing to strategy of selling stock short. You pick up 1200 dollars as protection on korean market collapse. Initial margin about 2,000, slightly less than 600 shares of stock short. Intrinsic value of option is 1 1/8 and premium is 7/8. If skm continues to be pushed higher by irrational investors you are better off by the premium as compared to short stock sale. 2 More aggressive Sell 6 September 10 calls at 1. You can do the math but this provides less downside protection and more upside profit. Once again I am comparing strategy to straight short stock strategy. I have purchased makox as of Friday and will be doing option hedge this Monday. First I have to check out what are terms of ogz option which is listed on cboe along with skm options.