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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: renovator who wrote (163877)2/14/2012 12:54:57 PM
From: Bearcatbob  Read Replies (2) of 206297
 
I wrote some Jan 12 1/2 Puts for 2.91 on the premise that it goes sideways for a bit and scrapes some of the premium off.


This opens one of the great questions of short puts. One can sell far out puts and get a big real time injection of cash. Alternately, one can do the puts monthly and IMO generate more total income from the same margin allocation.

I have chosen the monthly route. If the stock takes a dive near term one can roll the short position out far and essentially go long the stock, take the loss - or simply take assignment.

I am inconsistent still on how to handle shares that take a sharp fall. Cisco and Morgan Stanley are examples. In August I rolled puts to Jan 13 puts and essentially went long the stock with a cash infusion. Cisco has closed to the strike price and I believe MS will come close by the end of the year.

I would not open a new position with far out puts.

Bob
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