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.

Pastimes : The Naked Truth - Big Kahuna a Myth -- Ignore unavailable to you. Want to Upgrade?

To: wlheatmoon who wrote (25729)	3/16/1999 8:54:00 PM
From: John Pitera	Read Replies (1) \| Respond to of 86076

I have an investment portfolio that is longer term and a trading portfolio. I would generally be try to buy ALA in the investment section, but I am concerned about the quality of ALA's earnings and the recent spate of acquisitions and whether they have paid to much and bought to precipitously to expand into the US market at what may be an ill-timed moment. that aside, If you ALA doubles or triples between now and Jan then the 375 will not be nearly the % return of the 50 points you would earn on a 100 shares, if it were to triple. ALso if they blow up to 10 then you are in at a cost basis of 16.25 for the 100 shares that is now at 10 also unpleasant.. So there are limitations to selling puts, as it will tie up money that could go to other ventures. If you want to play around with an options strategy... buy an oeydh april 640 call @29 write an oeydk apr 655 call @22 cost you 7 dollars but your april 640 call is worth 15$ Buy oeypn April 670 put @24 write oeypk april 655 put at 17 cost you 8 bucks here but you again pick up 15 dollars of intrinsic value on the april 670 put OEX close at 655.55 the 2 655 oex options are at the money and will expire worthless now you get the 15 bucks worth of premium that will you will spend a net of 15 dollars to get. oh and the pay out is in a little over 5 weeks so you can do this 9+ times a year......100% return for the 5 week cycle?? If you calculate your annual rate of return you will like. study well young grasshopper. what if the oex goes up 50 or 100 points or down ...build a spreadsheet and see ... I believe this strategy is what is know as Delta neutral. How can this be? If you hav seen SHakespeare in Love... you will remember the famous line..... ~ I don't know it a mystery~~ more serious explaination later.