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To: David Musolff who wrote (19569)	4/18/1998 12:50:00 AM
From: Lost in New York	Respond to of 95453

Your thoughts on this verses just selling the puts. I think that covered calls behave pretty much the same as a naked put, however I'm too tired at this point to show the math. There are are some differences like voting the stock and dividends and such. So I think you've just taken a double position using two different methods. I think it would boil down to which options would allow you to capture the most "volitility" at the least cost. Dave

To: David Musolff who wrote (19569)	4/19/1998 1:47:00 PM
From: SJS	Respond to of 95453

Dave this is a bull straddle. I suggested a very close cousin of this exact same idea to Big Dog a few days ago, for August puts which he had sold. I think he decided to say short on the puts without doing the call write. So he just short puts for now (or at last discussion point). You might want to modify it somewhat in that instead of straddling a point, you straddle a range. You sell a higher priced strike call (like the May 40's). That way there is a better chance you won't get called on your calls at all. It's not hard to do and you generate more return, typically. A general rule of thumb is that if you expect the stock to move dramatically but don't know which way it will go, you buy a straddle. If you expect the stock to stay in a bounded range, then sell one. It appears you expect a bounded range...or do you? Looking at your decision to even investigate this (or is it just a thought exercise???)........What is your underlying assumption about FGII? You need to start there. From your data, it would appear that you are bullish because you hold the stock long as well. If your bullish, then don't sell the 35 calls and limit your upside at 35 just for the premium alone. Sell the 40's. Can the stock move about 15% in one month? Will it attain and hold 40? If you think so, then just write the puts and stay long. My personal conviction (I watch the stock but don't "know" it...)is that the stock has been very strong lately. It will likely have to rest. You might want to sell covered 40's now, and if it comes back down, "leg-into" the straddle's put side for maximum return. There's not as much risk in this, as you're first writing covered 40's, which protects your long stock. If you get a little weakness, you'll get bigger premiums so then write the puts. Regards,