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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: Mike Gordon who wrote (22015)	2/4/1999 6:30:00 PM
From: billwot	Respond to of 77400

Mike For long term holders, buy more. Well, I guess I know which strategy I need to follow!! billwot

To: Mike Gordon who wrote (22015)	2/4/1999 6:44:00 PM
From: James A. Shankland	Read Replies (1) \| Respond to of 77400

Conservative:.....Sell Feb 99 110 Covered calls @ 2 7/8 or better. Concerned:........Sell Feb 99 105 Covered Calls @ 5 or better. Panicked:.........Sell Feb 99 100 Covered Calls @ 7 7/8 or better. However, if CSCO recovers prior to Feb 20 and exceeds the strike price, you will loose [sic] your position. You will not lose your position if you buy your calls back. If you really sold Feb99 105 calls for 5, and CSCO was at, say, 106 1/2 on Feb 19, why would you lose your position when you can buy your calls back for 1 5/8, earning a handy 3 3/8 profit? Of course, if CSCO goes way up in the next two weeks, it could be pretty expensive to close the short call position. Also, there are tax issues around writing in-the-money covered calls against a stock, if you'd like long-term capital gain treatment on the stock. Covered call writing is a perfectly reasonable strategy, but I don't think of it as damage control. If you're a long-term CSCO holder, and would like to continue to be one, don't write covered calls unless your pockets are deep enough to cover a possibly substantial loss when closing your call position. I do agree with you, though, that "all is not lost."<g>