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Biotech / Medical : Agouron Pharmaceuticals (AGPH)
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To: Randy Schmid who wrote (2438)10/21/1997 4:28:00 PM
From: Steve Fancy  Read Replies (1) of 6136
 
>>I've asked over on the Options for Newbies thread about when people close out options they've sold and have to buy back. No answers yet...Steve - anything to contribute?<<

Hi Randy...not sure I understand the question. I had to buy back an October Agouron 55-50 put credit spread that I sold to avoid being put 2000 shares of stock. Fortunately I made money on a 45-40 put credit spread I sold earlier in the month. I jumped the gun with all the initial enthusiam after earnings and went against my own rules when I sold the 55-50. In any case, if you clarify the question I can try and answer it.

Two other option scenarios you missed...sell puts, either naked or credit spread. If you believe the stock will be 55 or above at expiration, you can sell the 55 puts at 4 1/4 to 4 1/2. Normally I sell OTM options, but I sold the 55's last friday at 6 1/4 to try and recover a loss. You can limit your downside risk and margin requirement by buying puts at a lower strike price, creating a credit spread. This way I put the money in the bank, rather than take it out. Anyone seriously considering selling options should throughly understand the risks involved before getting involved.

Agouron held up fantastically on Friday, and had a great day yesterday and today. Anyone find a reason for the gap-up on the open today? Stock jumped again late afternoon on sudden surge in activity. Interesting watching this stock trade.

sf
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