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Strategies & Market Trends : Options
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To: Jill who wrote ()2/26/2000 11:45:00 AM
From: Seeker of Truth  Read Replies (2) of 8096
 
This sounds like a philosophical question but I think if we knew the answer it would have practical value. Why are we all making so much money selling puts? I'm no genius and what intelligence I do have is hampered by panic attacks, yet even I am making money hand over fist with these puts.
What's going on? I assume the buyers of these puts are bears and see buying puts as a clever way to sell short. There's no danger for them of a short squeeze. Their maximum possible loss is what they paid for the calls and they could multiply their money by several times in a month or two if the stock really collapses. But they seem to be paying way too much for this chance. Is it because of the Damocles sword of the Fed and the interest rate increases? Or the unprecedented P/E ratios? In a more normal time is selling puts an uninteresting way to go? Or is this just another example of the market underestimating gorillas?
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