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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study! -- Ignore unavailable to you. Want to Upgrade?

To: Herm who wrote (10881)	5/22/1999 10:37:00 PM
From: Roy Travis	Read Replies (1) \| Respond to of 14162

A few days ago, after a big selloff of SEPR on news that wasn't really that bad, I entered a Jun 80/75 bull put spread on SEPR (net +1 5/8). Bad move. This puppy is still sinking like a stone and I'm now approaching my maximum loss position, so I'm looking for a strategy to ease the pain. With current IV soaring, I'm still looking to sell premium and I'm considering another bull put spread, maybe something like the Jun 70/65 (currently net +1 7/8), to try to catch the first bounce. (That's what I thought I was doing a few days ago. It's got to work sooner or later, right? Right? Right!!) I'm also considering the Jul 70/65 spread but there's no bid/ask yet for the 70's. Maybe next week. What I'd really like to do would be to wait for the first credible uptick of the stock and then sell my long Jun 75 puts for at least the current 9 5/8, which with the original credit of 1 5/8 would put my nut on the eventually assigned stock at no worse than (80 – 10 1/4) = 69 3/4, which is only one point away from the current stock price. This would also put me in a good position if the stock should move up from here before Jun expiry so that I might actually buy my short 80's back for a profit and totally salvage the position. Unfortunately, there are quite a few puts involved, and selling the 75's would goose the margin requirements on the then naked 80's to more than the account can handle. So, that's my short term problem. Longer term, I'm wildly bullish on this company and I'm willing to bet the farm that the stock will be 20 points higher within 2 years. Within one year, on the same proposition, I'd risk maybe the barn and a hen house. With this view of the stock, what's my best long term strategy? I'm considering DIM naked Leaps puts, or possibly (to keep the margin reasonable) a Leaps spread with 3-4 strikes between the puts. (Did I mention I was bullish?) I've never done Leaps puts before and I'm wondering if this is an OK way to play it. All suggestions welcome. --Roy