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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Ken Beal who wrote (65196)	9/11/1998 11:23:00 PM
From: nihil	Respond to of 176387

RE: Options and Margin I think you're correct on significant scores, but there is serious strategy involved and risk-return tradeoffs. If you believe that Dell will continue to grow hitchlessly at past rates it doesn't really matter what you do, except you don't want to sell covered calls. Cash account stock will grow at 50 or more per cent a year and will make you filthy rich in a few years -- who cares how many. It is always possible that DELL will not grow hitchlessly but by fits and starts at a slower rate -- say 10-20 % a year. This could happen, and when the market recognized the slowdown, there will be a big drop in price. You will be glad if you stuck to stock -- options and margin could cost you everything. You might just stick to stock with closely trailing stops. If you really believe in DELL growth, check out LEAPS and consider bullish call spreads and bullish put spreads. The spreads mean you offset the time decay of the long options with that of the short options. Keep some cash, and buy back the shorts when the underlying drops (place some lowball bids). Don't buy or sell at the market, play the spread asking 1/8 less than the ask on a sale and bidding 1/8 more than the bid on a buy. On a two year LEAP spread out of the money you can start with a four bagger and work it into a five or six bagger with a couple of trades. Bail out as soon as it advantageous or both ends are in the money. It is tempting to hang on and max out the trade but if you cash you can always roll it forward and do it again. This gives a year to choose an exit point, and protects you from inconvenient Januaries. Those December tax sales can play hell with you expiring LEAPS. With computers and Intel, the fall is usually the best time to sell and the summer is the best time to buy.