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: Tom K. who wrote (965)	1/25/2000 2:59:00 PM
From: David Lind	Read Replies (3) of 1235

Tom, what are doing to hedge your NP portfolio, if anything? I have established one account specifically for NPs, with 100% T-Bills creating margin. I'll be using about 50%of margin to work up to generating10K per month. I'm looking for 30-35% return on the total margin when I get rolling. I'm thinking it might be good to hedge with one or two long puts, bought with an extra NP or two. But I'm not sure where to place the put. I'm toying with the idea of buying a put on a severely overbought stock or two, with the logic being that they are likely to lead, or at least to follow any correction, and if the market does not correct during the life of the put, I may even gain from a fall in the stock itself. In that case the protection would end up being a nice credit. I'm interested in opinions. The other issue is the duration of the put. 30, 60, 90 days? Long puts are new to me, since I have always tended to go long stocks or calls, or do NPs. But there does seem to be some logic to using them in this case. -David

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