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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (37585)	11/27/1998 5:26:00 AM
From: accountclosed	Read Replies (1) \| Respond to of 132070

MB I really appreciate you going into these buy/writes and spread conversions. I put on the arc/zfram buy write on wednesday. I have some follow up questions in this area. 1. I understand a spread conversion to fall squarely in the 90% of the 90/10. A buy/write is missing the put protection of a spread conversion. I assume that you are still considering the buy/writes you do as being in the 90% and the put protection that you haven't paid for is replaced in its protective capacity by your fundamental market view. In the example of arc it is supported by your view that oils are generally undervalued and possible consolidation. Can you comment on where these fall in the 90/10 area, i.e. are they on the riskier side of the income portfolio, but still in the 90%? 2. Do you do buy/writes with the write at a higher strike price? Such a thing reduces cost basis by less than a buy/write at the money, but allows you to keep more of the upside. Would arc, as an example offer a good opportunity in this respect? And again, where would you place such a position in your 90/10 scenario, as it is even riskier than a buy/write at the money? 3. Can you give an example of how you unwind a buy/write early? I assume you do some sort of calculation. Then first buy back the call and then sell the stock. But do you do more complicated things like roll up the call to a higher price when the stock goes way up? 4. The same question as #3 related to spread conversions. If I follow the model the same, perhaps the stock has gone way up and you first buy back the call, then sell the stock. Might you keep the put for your 10% portfolio? Say for example the stock under consideration was csco. Unwinding the stock and the call, but keeping a leap put on csco might not be the worst thing in the world <g>