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

To: Sig who wrote (80190)	11/14/1998 8:46:00 AM
From: Voltaire	Read Replies (2) \| Respond to of 176387

I have received several inquires from individuals on the board who have faced or are facing margin calls. There is a way to handle this without a lot of panic and stress. Especially with a great stock like Dell. That is the first rule. I will only apply this to a stock like Dell. The reasons are simple 1. We know it will come back ( if Dell does not come we are all in a lot of trouble anyway) 2. it pays fantastic Covered Call premiums. At any rate outlined below is the Kick-Ass strategy that I use to laugh in the face of shorts. I am not concerned about long term gains here, too many people step over dollars to pick up pennies. We want to use the power of numbers. Now lets kick some butt! ( I will not include commissions) 1. You buy 3,000 shares of Dell @ $70 per. Total cost $210,000. 2. Dell can drop approx. $19 before you get a slight margin call. But for the sake of PANIC lets say ( Michael Dell dies in a plane crash)the stock drops like the shorts say $26 and you get an approx. margin call of $18,000. WHAT DO YOU DO! 1. Calmly phone your broker and tell him you want to write 30 calls on the Jan 2001 70's that would be paying approx $25 per share or $75,000. This not only satisfies your broker but also gives you another $150,000 worth of buying power. And this is the KEY! You are now buying Dell at $44 per share rather than $70. 2. You tell your broker you liked that so much that you think you will try it again. 3. You take the $150,000 in buying power and now buy approx.3,400 more shares of Dell, do the same thing and pick up an additional $85,000 or $170,000 worth of buying power and you hope Dell is down even further but you are disappointed because it is still at $44 and you buy an additional 3,800 more shares and pickup an additional $95,000 or $190,000 worth of buying power and 4,300 additional shares. Summary: So when the laughing shorts started kicking your butt, you had 3,000 shares working for you going down from $70 per share. You now have 14,500 shares working for you coming up from $44 per share and not only that, you are covered so any further reduction in price is greatly limited. True the gain will be offset to a degree because you are covered but you will have many more shares working for you. I had rather have 14,500 shares at 60% appreciation and be covered to the down side than 3,000 shares working the way you had it. This is just for starters, as you can see you could carry this out till it would boggle the mind. That is why most people would never do it. They are too structured and had rather be short and make $300. So with a stock like Dell just sit back relax and hope the stock continues down. Like I said the first night I posted. Never buy a stock that you would not mind seeing go down. P.S. - it has been a great two days shorts. Go try to blow somebody else. From the porch- Voltaire