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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Tommaso who wrote (171332)6/9/2002 4:48:33 PM
From: ild  Read Replies (2) of 436258
 
<<<I would say that selling puts and using the money to buy calls is a very aggressive leveraging that could wipe a person out in a short correction.>>>
Selling naked puts is a legit way of accumulating a stock. Naked put has the same risk as holding a stock. Plus you make some $ on interest. By selling a put and buying a call you create a synthetic stock. Risk depends on how many naked puts you sell. I sold some GFI OCT02 12.5 for $2.25; HGMCY NOV02 15 for $2.95; and AU JAN03 25 for $2.3. I'm fine if I get assigned on them. Fear (read puts premium) in golds was pretty high on Friday so I decided to sell it. I didn't buy many calls yet. If the stocks go lower or stay put I'll buy more calls.

BTW, I've been selling naked puts on AU for three years now. I got assigned once in 1999. I still hold it.

EDIT: IMO what Jay meant in what he said my puts should be fine and calls may not is that he thinks gold shares will stay put, so both calls and puts will expire worthless.
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