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Strategies & Market Trends : Options
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To: Uncertain Walker who wrote (3522)2/24/2000 8:47:00 AM
From: Jill   of 8096
 
I'm sure ed will answer this far better than I, but I just want to note, that when stock tumbles you CAN repair. You buy back your puts for more, but you simultaneously sell puts further out to "refinance." On a sudden drop all puts will have richer premiums. I did this last Sept when QCOM pulled out of a conference and dropped 30 points a few days before options expiry. It was getting very close to the level I'd sold puts, and I was nervous (it recovered the next day actually, but that's another story). So I bought back the puts for more, and sold Jan puts to cover all my costs and come out with a profit.

If you're the seller you can reposition. You would only get caught if you'd maxxed out your margin and left no cushion for volatility.
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