Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: SecularBull who wrote (30818)	8/11/1998 11:49:00 PM
From: Roads End	Read Replies (1) \| Respond to of 97611

LOD..I have to agree with you that GS is talking out of both sides of their mouth at the same time. Putting a stock on the ultra buy list as they did and to hedge at the same time ought to be grounds for SEC investigation. Steve

To: SecularBull who wrote (30818)	8/11/1998 11:55:00 PM
From: Merlo	Read Replies (1) \| Respond to of 97611

Choose your stocks very carefully buy only special or story stocks with some type of unique appeal like CPQ, which in my opinion could be the next IBM. Todays Dow Industrials market actions had bearish overtones.

To: SecularBull who wrote (30818)	8/12/1998 12:23:00 AM
From: CCWriter	Respond to of 97611

LOD, You were implying that Goldman's sell of calls was a reason to be bearish on CPQ. My point is that there is a BIG difference between expecting a short term price drop and being long term bearish. blaine

To: SecularBull who wrote (30818)	8/12/1998 10:29:00 PM
From: Mike Fredericks	Read Replies (1) \| Respond to of 97611

Yes, this is exactly the point. I know how it works. I was making the observation that Goldman did this after upgrading the stock. This indicates to me that Goldman expected the stock to fall, but they upgraded it to make some dough before the drop. You gotta be nuts to write covered calls on a stock that you think is going to fall. You open yourself up to losing more by the stock falling than you make in call premium. I did just that recently with PWAV, bought at 16.5 & wrote the 17.5 calls that were selling at 1.5 (exceptionally high volatility). I was perfectly happy with the stock trading at 15 or above. I would have been happy to be called out and make my short term profit. But I did not expect the stock to drop to $12, and I lost quite a bit of $ on it. Covered calls is a good strategy when you think that stock is going to be flat to moderately rising. If you think it's going to fall, even a little, you're probably better off sticking your money in something you think is going to go up, rather than hoping that the call premium exceeds the downward stock movement. I will agree with you that for them to write all the call options that they are not expecting a short-term big up move. So their comment about "it should be trading in the 50's" is a little suspect, since they obviously feel it shouldn't trade above $35, for the next 2 weeks anyway. -Mike