Replies to post #44149 on A.I.M. Users Bulletin Board (AIMUSERS)

[Toofuzzy]

Vitaali

I have thought of using Jeff Weber's method but couldn't pull the trigger.

I would have enough money to buy the underlying shares If doing it, otherwise you are leveraging yourself to crazy levels. 100% loss is possible.

I have done something slightly different.

I buy deep in the money option LEAPS at about half the current price.
1) there is very little time premium that way.
2)I end up going from 50% cash to 75% cash. I do not use this as an opportunity to leverage up.
3) I invest the excess cash in a short term bond fund that pays better than 5%.
4) I pretend I am Aiming the actual shares unlike Jeff who Aims the options. So if I buy 10 LEAP call options I pretend I am Aiming 1,000 shares. For PC value I use what the cost would be if I called the shares. If I have a $40 call and I paid $42 for it I pretend cost was $82/share. If I then sell one contract at $5,000 I pretend I sold a share for $50 + $40 strike price or $90/share.if I buy more shares at $30 I pretend it is at $30 + $40 or $70/share.

Jeff's method will have more volatility. In general Aim likes that. Make sure you start at market bottoms though.He says start a position near 52 week low.

Toofuzzy