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Dow 6000 ? Stock prices: "no Expiry" options on survival

Another painful week with all indexes losing over 6% in just one week. Those were the times when such moves used to happen in one month or one quarter. With Dow and S&P 500 down by nearly 25%, one wonder 2008 was not that bad compared to 2009. At this rate, it's just matter of time before DOW hits 6000 - I hope it does not happen.

I am not going to recommend any stock this week since markets are in down trend and any stock I recommend would be down next week so what's point in buying anything ? Only one reason I would consider buying stock in this market is following:

Most of the stocks - pick any say GE, DOW, AA, BAC, BCS, HIG, XL and so on are trading as if these companies are going to vanish in next few months. The stock prices are almost like what option traders used to pay for 6-9 month call options not long ago. So why not buy stock at same price what calls used to sell for. 

For example, when GE was over $30, it's c9-12 month call for strike price of $30 would say for $5-6. Now you can buy the stock outright for $6. Same goes for all companies I mentioned above. Most of the DOW stocks (except Citigroup) could be good buys as "no expiry" call options just based on their survival in long-run.

So pick you choice and decide if you want to play this investing strategy. As bonus, you can get dividends (which have been cut nearly 70% or more) and you can sell covered calls on your stock - month after month.

Have a good weekend !

/Shyam

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