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Strategies & Market Trends : Classic TA Workplace

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To: yard_man who wrote (46580)	7/21/2002 5:22:21 PM
From: UnBelievable	Read Replies (2) of 209892

After Your Response I Re-Read It And Realized It Was Confusing I think the confusion was associated with what being put the stock means. My first post used it as I have usually seen it used (that is that the option holder is put the stock - meaning he receives the strike price for the shares and if he does not have the shares he is considered to have sold them short). But that is confusing because the option owner is the one selling the shares. While I know that you can not sell options (except covered calls) from a non-margin account your question is a good one because I know I can buy options in my IRA Account and that can't be a margin account. While I have held both in the money puts and calls into expiration so I have experienced having a short position opened for me as a result on the puts one of the worst experiences I had involved holding Calls into expiration. I remember once on Option expiration Friday I bought 100 MSFT calls with a strike at the Max Pain Price while the stock was trading about .75 under max pain. As I recall they were about .40 a contract. During the day the stock in fact went up and I sold about half of them for about a 100% profit. I kept about 50 of the contracts into the close since there was an EOD ramp going on and MSFT was going up into the close. It in fact closed in the money by .25. I knew if I didn't exercise them I would forfeit the .25. Since I, as a short, knew the market never goes down I decided to request that they be executed. (If they were in the money by more than .75 they are exercised unless you ask that they not be). Monday morning I was the proud owner of 5,000 MSFT shares which created a Margin Call. Of course Monday morning MSFT opened under the strike (which is what I had paid for them) and starting sinking. I get very nervous whenever I hold anything long so I just dumped them and ended up losing about twice what I had made on the other half I sold on Friday. Another example of the fact that in the market low hanging fruit is usually rotten. <gg>

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