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Strategies & Market Trends : Jimmy's Option Pit and Undervalued Stocks

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To: Carolyn S. who wrote (3)6/17/1999 6:30:00 PM
From: Gerry Schechter   of 47
 
Carolyn when you sell puts you receive a premium-when you buy calls, you pay a premium. Both vehicles give you the risk of being long, however with the short put, your cost is reduced and your upside is limited. With the call, your cost is increased, but you upside is unlimited.
Shorting puts is a great way to receive a steady income of 6-12% monthly-if the stock does a nose dive, you will lose, but less than if you had just been long the stock.
Always identify what your upsides and down sides are before you take a position.
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