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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Roger A. Babb who wrote (12291)	8/2/1998 10:08:00 PM
From: McNabb Brothers	Read Replies (3) \| Respond to of 18691

Roger, If one is willing and financial able to go short a stock like AMZN, then one is taking less risk in selling a naked call or calls on it if it has any time value at all! You sell 1000 shares short AMZN tomorrow at $110 and I will sell 10 of the Oct. 135 at $8 1/2! If AMZN goes up above $135 and I have to sell it short at $135 then my short basis in AMZN will be $143 1/2! Which means it would have to go above $143 1/2 before I start losing money and you would have a $33 1/2 loss in your short position! Now if it goes down and my options expires worthless I picked up $8 1/2 points, and for you to make the same amount of money the stock will have to close below $101 1/2! If it continues lower then $101 1/2 then you will make more money then I will, but with AMZN I have a good chance of rolling out another two or three months if it stays above $100 and pick up just that much more premium! My point is selling naked calls is not near as dangerous as most have been taught or told by brokerage firms and brokers, if one is willing to go short the stock in the first place! As of now I had some July calls that expired on AMZN and in three weeks I believe my Aug. naked calls will expire! I'm beginning to roll out to the Oct. calls and will look at the Sept calls very soon! There is nothing more fun then to sell time value that will expire in the very near future! Hope this will help in how I sell naked calls! Hank