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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: jeffbas who wrote (5206)	10/29/1998 8:35:00 PM
From: Allen Furlan	Respond to of 78530

For what it's worth, there may be opportunities in stocks with leaps which can be sold against the stock for possible long term gains and with reduced risk. An example is madge systems(MADGF) which is currently trading at 3 3/8. Net of the year 2001 call(strike 5) my net cost for this stock is 1.875. I believe the company with over 3 dollars cash will survive and hopefully be above 5 in 27 months. If so the annualized return will be almost 60%. Normally I write ratios of nearer term(3-4 month) out of the money calls but I am cautious because of the possibility of a secular bear market. I have used this strategy many times in the past for 1- 1 1/2 year options(KM,UIS,DEC) Of course the great bull market would have made outright purchases many times better. But the point is that if you are very very nervous about the market there are alternative strategies which significantly reduce risk but still offer reasonable expectations.