Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Chuzzlewit who wrote (96498)	2/10/1999 9:29:00 AM
From: edamo	Read Replies (1) \| Respond to of 176387

agree with all you state....remember if the stock is driven lower the leap you have written gives you a downside cushion versus just holding the common...hypothetical case we discuss..buy dell@100, sell leap for40 premium, cost basis is 60...if dell drops to 50 your paper loss would be 10 using the leap stategy, but 50 just holding the long...the leap strategy allows you to hold common without being stopped out...if dell lingers at 50 for a while and you believe the trend is sideways/ down.you close the 100 leap, replace it with a lower strike which reduces your cost basis...when the time comes that you believe dell will turn, instead of averaging down with the common, sell puts and back into the common at a lower than market price..if the stock moves up rapidly follow it up with puts....