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

To: edamo who wrote (111947)	3/25/1999 2:38:00 PM
From: Marq Spencer	Read Replies (2) \| Respond to of 176387

ed... re: dynamic position...premium erosion...roll-up. That would work, but not in the example you gave. That was the problem with your example - there was no time premium to the put because it was so deep in the money. Let me give you an example where your strategy would work: Dell Jan 2001 $50 puts. These were going for 19 yesterday when Dell was at 38. So, if you had $10,000, you'd write 2 puts (covered by your cash), get $3800, buy 100 Dell. This would give you the appreciation of 300 shares of Dell (2 short puts and 100 sh long) until the price got to 50. Above that only your long position (100 sh) would appreciate. The combined put/long would also protect your downside to 33.33 because of the extra time premium that you received. This is a good strategy if you think that you want to be long Dell anyway, and are not expecting a barn-burner run. Also, as the time premium erodes, you can close the put position and roll up as well. - Marq.