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

To: Mohan Marette who wrote (77017)	11/8/1998 1:09:00 AM
From: finfan	Read Replies (3) \| Respond to of 176387

Mohan & Kemble and all DellHeads, Have you sold naked puts on Dell Leaps? I have been considering doing that and I was seeking some input/help. If an individual had $30,000 and was interested in selling the naked puts on the Dell January 2000 with a strike price of $75. Assuming that the investor received the 35% margin level, should he be able to sell ($30,000/0.35 margin/65 dell current price =1318 shares) 13 contracts at the current price of about $21/share for a nice payback of (1300x21)$27300? This means that the investor would have to be satisfied with a return of (75-65+13) $23 per share upfront. This translates to a 35% return. The return could actually be even higher if the investor went for a higher strike price like 80, 85 or 90. Of course, this return pales to the recent returns that Dell had been turning in. One of the pros of this is that the investor does not have to pay any margin interest cost as margined covered call writing would. Of course there are 2 major cons. One would be having to pay the taxes in the same year the profit was made and the other is the potential loss of much more gain should Dell continue to perform even half as well as it had been over the last few years. I am interested in your thoughts as well as those of any Dell Head. Thank you. Finfan