Ascend Communications (ASND) Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Ascend Communications (ASND)

ASND 207.04

+0.7%

Dec 8 3:59 PM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Carmine Cammarosano who wrote (14746)	9/28/1997 11:40:00 AM
From: Glenn D. Rudolph	of 61433

I hear you...its nice to be able to sell a large contracts that have a large time premium...however, the total amount that you get for selling the put that is far in the money, is so large that I think its a trade off...lets take for example the Jan '00 $60 puts for ASND...someone appears to have sold them for $26 7/8...considering how hard ASND has been beaten up and how good the long term prospects look for the networking industry, I think it's an OK move to sell those puts and collect, even though the time premium is small...ie sell in the money puts when the stock has been beaten up and you are confident that the stock will come back... Carmine, There are preferences and I cannot state one is correct or one is wrong. However, it is my habit to sell puts near the strike price for the time premium and sell the near term expiry month in most case. This may not be the case referring to Ascend. I am not often a call buyer but if I feel the stock is very undervalued, I will buy calls but buy deeper in the money to eliminate time premium and go around six months out. Your selling deep in the money puts will work if the stock moves up but gives little room for error. The time premium on a close strike price will give protection and the capital tied up when buying the call is less. I cannot say there is always an exact answer nor do I know them for each position. I have sold deep in the money puts. I will explain why but am still not sure that was the way to go. I sold 50 strike price Sept puts for Ascend when Ascend was in the neighborhood of 51. Ascend dropped like a rock as we all know. There has been a shift lately for those holding the puts to make a stock assignment prior to expiration. I have no idea what advantage there is to this but I have noticed this to be more frquent during the last year. I was assigned enough shares of Ascend at 50 that I could not hold the shares. I sold them at a loss and then sold further out 50 puts again. This way I could afford to keep my position. I am sure there were better ways to handle the problem but that was what came to mind. This was more of damage control which I should have handled by buying a lower strike protective put before this occurred. Too aggressive on my part. The market will teach me a lesson every time<G> Glenn

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next