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Gold/Mining/Energy : Big Dog's Boom Boom Room

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To: Q8 who wrote (111945)	10/15/2008 9:48:28 PM
From: skinowski	Read Replies (1) of 206214

"Protective" puts are long puts - which the investor buys in order to have downside protection for their holdings. I spoke about something quite different - selling puts. Going short puts. A short put acts the same way as a covered call - the profit is limited by the amount of the premium received, while the potential risk can be substantial, depending on the movement in the underlying. In other words, you stand to lose or win about the same amount, whether you sell a covered call, or sell a naked put. If the market remains flat, than either one of these strategies will make money - due to evaporation of time value (and the implied volatility).

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