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Technology Stocks : VLSI Technology - Waiting for good news from NASDAQ !!! -- Ignore unavailable to you. Want to Upgrade?

To: Linda Kaplan who wrote (4595)	10/8/1998 10:52:00 PM
From: ron delany	Read Replies (1) \| Respond to of 6565

Linda, Boy I'm reluctant to give direct advice but you might consider selling calls against your long position (jan 5's or 7.5's) and using the premium to buy back those in the money puts . Maybe you could try it with just a few to start and get some sense of it. If your cost basis is 7.5 or less then you'd come out okay even if the stock goes above 7.5 and you have to give up the shares. (assuming you go for the 7.5's) If it goes sideways you're earning the at the money time premium which you are not at all with deep in the money puts (since there's no premium to earn) Given enough time under that scenario you could work the basis down to zero. Iif the stock goes down, well you're in much better position although you do lose some because the call premium doesn't protect you beyond a certain point. You'd have to buy puts (jan 5's probably) to protect against that.The disaster with this strategy is the same as your current hope (a strong move up before jan expiration where your stock gains point for point and the puts gain almost that much.) A close above 15 by jan would definitely be a problem for this strategy but how many stocks double in 3 months during a bear market correction? I realize this is pretty complicated and options are definitely treacherous. But you got yourself into them with your put sale and those things can get exercised at any moment. (plus how unpleasant to be forced to pay $15 for shares you don't want, can't afford, and that are available for $6 to anyone else) I'd way rather be sitting with at the money covered calls than deep in the money puts especially during a downtrend. Then after jan assuming this strategy goes okay you can get back to the AIM system about which I know nothing but boy if it works for I'd stick with it. In any case, good luck avoiding the early exercise, and let me know how it works if you decide to do it. Ron