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

To: accountclosed who wrote (37874)	12/1/1998 11:47:00 PM
From: Knighty Tin	Read Replies (4) \| Respond to of 132070

AR, basically, if I like the stock, as I do all those you own, I am reluctant to cut my potential return by buying an out of the money call. If I dislike the stock, but love the premium, as I do with Dell or Lucent, I am very happy to add the put on any uptick. Others, that I may like, but are very volatile and do not have dividends, such as Keane and Sang, I tend to add the short put after a decent pop in the stock. The trade off is adding the short put vs. taking the profit on the entire position. So, going in, I decide pretty much whether a stock is a buy/write (short put outside the IRA) or a spread conversion (Credit spread outside an IRA). If I am legging in a spread conversion/credit spread, and I don't like the stock, I may add the put even if the stock goes against me on unfavorable terms, just to protect myself. Or, I may even start with a long put. If it is a buy/write and I like the stock, I will only add a put if it is so cheap that I would be crazy not to. I did that with Incyte. The conservatism of my total income portfolio determines whether I am looking for buy writes/short puts or credit spreads/spread conversions. If I have locked in a decent buy somewhat boring rate of return on the whole shebang, then I am more likely to try a put sale to liven up the returns a bit. If I am taking down nice returns but in a high risk position, I am more likely to opt for the credit spreads as a way to guarantee capital preservation. Another factor is what I call the ph level of my income portfolio. If I am overly bullish, then I want some bear credit spreads. If I feel the portfolio is overly slanted to the bear side, I am more likely to sell puts or do bull credit spreads to neutralize it somewhat. MB