On Friday, October 24, 2008, I wrote an essay called "Blue Chip Bargains." It dealt with buying the safest, most undervalued stocks of the highest growth, largest capitalization companies in the VectorVest U.S. database at bargain prices. It also said, "I would be in no hurry to buy these stocks right now. I'd wait at least until the Price of the VectorVest Composite goes up for two consecutive weeks; then I would begin to nibble at the list and I would buy Leaps instead of stocks unless I wanted the cash from dividends and I'd sell Covered Calls against my positions to reduce cost and risk."

So why would I want to buy Leaps instead of stocks and sell Covered Calls against those positions? The answer is to mitigate the uncertainty and incredible volatility we have been facing over the last 15 months. I want to take advantage of potentially rewarding opportunities like buying Blue Chip Bargains, but I don't want to take a lot of risk in doing it. The technique of using Covered Leaps is just one of several ways of "Taming the Tiger." We have demonstrated such techniques on several occasions.

For example, the first "Taming the Tiger" demonstration dealt with a "Safer Way To Short Stocks," and was presented as our "Strategy of the Week" on December 5, 2008. If you're concerned about the risks of selling short, you may wish to see this presentation at the VectorVest University.

The technique of buying Leaps and selling Covered Calls, mentioned above, was illustrated as our "Strategy of the Week" on December 12, 2008. It was called "Taming the Tiger - Part II, and was featured as a "Safe Way to Lock in Low Prices." If you haven't been using it, you may be missing out on some great buying opportunities.

Since selling a Put is mathematically the same as selling a Covered Call, we presented another "Strategy of the Week" on December 26, 2008 which entailed selling Leap Puts of Blue Chip Bargain stocks. We called it "Taming the Tiger - Part III, Raking in Blue Chip Premiums."

A less obvious way of "Taming the Tiger" was demonstrated in our "Strategy of the Week" presentation "VST Mighty Mites" on December 19, 2008. In this case, the high volatility of these stocks required that one employ a large Trailing-Stop setting of 35%. Therefore, only a fraction of the available funds were used to limit the damage a 35% loss on a single stock would have on the overall portfolio. I have used this technique on several occasions in managing the Model Portfolio. If you're buying and selling leveraged ETFs, you'd better know something about Taming the Tiger.