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Politics : Formerly About Advanced Micro Devices
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To: that_crazy_doug who wrote (117186)6/22/2000 4:30:00 PM
From: Elmer  Read Replies (1) of 1571040
 
Re: "When buying stock or calls my losses are limited to the amount I invest. When writing naked puts you can lose a multiple of the amount you invest"

First off I haven't invested anything and I still don't see how selling 1 put contract at today's price is any more risky than buying 100 shares at the same price. Please explain this. If I couldn't afford to accept assignment I shouldn't be selling a put but the same could be said about buying the shares. The only difference I see is with the put writing I would end up with the shares at a cheaper price than if I bought the shares outright assuming a price decline. My real intention is to have the puts expire worthless.

Re: "I think your strategy is excellent, but you playing it off like it's a very low risk strategy is insane"

To mitigate risk, you could do a spread. Sell an AMD July $90 put for $6 1/8 and buy a July $85 put for $4 1/2. That limits your risk to $3 3/8s and caps your profit at $1 5/8s.

EP
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