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Technology Stocks : INTEL TRADER
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To: Chris who wrote (5178)1/23/1999 5:07:00 PM
From: MonsieurGonzo   of 11051
 
Chris; RE:" a covered PUT is... "

...covered by an outstanding short sale of the underlying.

good grief, I never considered that; makes sense.

>My question is why would someone really need to do this vs. close the short position ?

hmmm... now understanding what it is (thanks, Chris) --

...to "cover" the short sale of a stock, which would be the actual position, not unlike (since double-negatives are en vogue) "covering" a long position of stock with a short CALL; ie., "insurance" of a long-term short position.

...to exit a short sale of stock position: you get paid for covering; again, like selling a CALL to exit a long stock trading position.

...to "leg into" some form of spread position which may consist of multiple strike options of various kinds.

...index arbitrage.

Have no idea why DJ would initiate a covered PUT, though -?

-Steve
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