Selling Puts: Have Cash Will Travel Message Board

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Strategies & Market Trends : Selling Puts: Have Cash Will Travel

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To: Cutthroat who wrote (896)	1/23/2000 10:49:00 AM
From: TheHahnz	Read Replies (1) of 1235

Re: risk of put selling let's assume you are interested in taking a 100 share position in broadvision BVSN which closed @162. The feb 160 puts are @25. You can buy the stock outright for 16K or sell 1 feb 160 put and receive $2.5K. if stock continues up... your put position retires and you pocket the premium for a 15% gain for 4 weeks hold. You hav'nt accomplished your objective of owning the stock, but you could repeat the process in March. If stock rockets to $200/sh you have missed out on extra 13 pt move (38 pts less 25 pts). if stock goes down... you will have accomplished your objective of owning the stock and the price would have to fall below $135 before you are in a loss position. For this particular example, selling a put is clearly less risky than outright purchase of the stock... Terry

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