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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: gb packer who wrote (17897)	4/13/1998 6:55:00 AM
From: IQBAL LATIF	Respond to of 50167

Sell covered calls- straight Septs- collect your premium but the problem is that you are only protected by amount of premium however if you like some protection for downside and also like to keep the position expecting that stock will trade around thses levels -Go for exotic trade as follows. I will sell 10% out of the money calls like Septs and use 60% of proceeds to buy 20% out of the money puts say July's- if major correction is to come we will have it by July where you have your protective puts working for you. I would assume that you will be able to buy 1 to 1.5 protection since it will be 20% out of money expiring much earlier than your covered calls. Now the risks are that market keeps going up -you loose the stock 10% higher but keep with 10% THE 40% OF THE COVERED PREMIUM. On the downside you are protected below 20% however your puts will be heavily gain premium which will offset most of your loss since your protection is 1 to 1.5 plus you keep 40% of the premiums. I have traded along these lines for quite some time I find them attractive and profitable the only worry would be margin calls if you are a seller of naked calls or puts that is not an issue here although it has some relevance in my previous suggestion to OJ. Of course these trades are complicated but money making is a little complicated business. As we move towards our first anniversary I have decided to move up a gear a little and start more exotic side of my trading game. When I write simply I am kicked anyway that it is over the top than why not to go really over the top. gggg