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Politics : Ask Michael Burke
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To: Terry Maloney who wrote (68942)10/11/1999 5:22:00 PM
From: Knighty Tin  Read Replies (1) of 132070
 
Terry, I have a few rules that I break regularly. One is that I don't like to buy strike prices more than 20% out of the money. But, when you get a pile of dog droppings like Dell selling for 65 times earnings, it sure is tempting to pick up a load of those $1 puts. One thing you may consider and that I do a lot is to layer my puts. Using your example, with $1000 to invest in Dell puts, I might buy 2 Jan 40s at 2 1/2, and 5 Jan 32 1/2s at a point. In fact, I did something like that today, with slightly different quantities.
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