The recommendation was to write the GM=XU December 2004 Puts (Strike@37.50) and take in a premium of $1.30. Well, the stock bottomed in December 2004 at $38, so the put option I sold short expired worthless, hence for putting up margin, I earned 100 pct of the $1.30 premium, and I never bought the stock. Ka-ching!

What I did buy was time. At the close of the calendar year, I opined (in my blog) that equity markets were likely to go into a funk and that I was not going long any stocks except maybe gold. So during the 1Q05 broad market decline, GM has gotten out the worst of the news, and has suffered through a further USD pullback and higher crude oil prices etc.

Now would be an appropriate time to go back into an accumulate position for GM. This time I'll write a longer put, the GM Jan06 put with a $30 strike (WGMMF) for a $5.00 premium.

That means I am giving somebody the right in the next ten months to sell me the GM stock at $30, which reduces my cost to $25. If the GM CEO yesterday paid almost $30, and I know that NOBODY (I mean NOBODY) has bought GM stock for $25 going back to the extreme bear phases of 1992 and the bottoms of the last two major bear markets in 1987 (Black Monday) and 1982, I'll take that bet.

Value Line puts out a detailed report on this company. On March 4, analyst Jason Smith issued a "3" Rating for slightly above-average performance out to 2008-2010, and the stock was $36.76. What's happened since March 4 except that the broad equity market pulled back as I had forecasted? Nothing -- fundamentally -- has happened to cause you to throw away your GM stock except that Wall Street and their complicit media friends are hammering the stock as best they can.

Say No to Wall Street, and start to accumulate the stock. You might even wish to buy some short calls on GM, which is where I'd put that $1.30 premium I took in last October on the December put writes.

You see, trading securities is always about putting the other guy at a bigger risk than yourself. At the end of the day, securities trading for buy-siders is a matter of risk management, and the sell-side has a job of transferring that risk from them to you.

Sooner or later, all readers of my blog are going to get that message.

BCara@BillCara.com