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

To: Voltaire who wrote (80193)	11/14/1998 3:48:00 PM
From: Sundar Rajan	Respond to of 176387

Voltaire - I really like your tip about covered calls. Dell's call permiums are huge usually the day before earnings and in may I wrote naked calls 7 points out of the money and closed after earnings. This time I just took in 3.5 for nov 70 against my stock and will probably do again for nov 65 on monday.

To: Voltaire who wrote (80193)	11/14/1998 6:58:00 PM
From: FR1	Read Replies (2) \| Respond to of 176387

Voltaire: I'm in this for the money <gg> so I gotta go through this call writing you are discussing. Let me talk it out my way and you can tell me if I got it wrong or not: 1. Say you are holding 1,000 shares of DELL at $65 and you are 50% margined. 2. Now let's consider where we go from here. Either we just sit still and wait for the ride back up or we sell covered calls using your method. 3. Let's say we know DELL will rise back up to $75/share in a month or so. 4. Selling calls: If we sold covered calls at Jan 01 with 70 strike we get $24/share. Then we take that money and buy more stock and sell more calls on it, etc, etc. I think you will find that you will add 800 additional shares to your holdings. As the stock goes up to $75/share, you will get paid 1,800 x $70 and all your stock is gone. Total cash given to you = $126,000 - $32,500 (original margin) - $20,400 (margin on call money) = $73,100. This is enough for you to buy back into DELL @75 with 1,462 shares, assuming you margin. 5. Not Selling Calls: If you sit on the stock and it goes up to $75/share your stock is worth $75,000 plus you are making $1,000 for every point the stock goes up. 6. Summary: So I guess what you are saying is that when it is all over and DELL is back up to $75/share, you will have 462 more margined shares (worth $17,325) and the tax consequences. ************************ Item........Shares..Price.Call...Premium..Buy Power..Shares Sell call #1...1,000...$65...$24...$24,000...$36,000....553 Sell call #2... 553...$65...$24...$12,000...$18,000....276 Sell call #3... 276...$65...$24...$ 4,800...$ 2,400.... 37 37 1,866 Shares total Total Capital Raised: $40,800.00 Total Capital Margin: $20,400.00 Downside:** I guess if DELL keeps falling, you are falling 1.8 times as fast as before. Franz