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Technology Stocks : NEXTEL
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To: P.T.Burnem who wrote (3653)12/12/1997 5:14:00 PM
From: John F. Dowd  Read Replies (1) of 10227
 
Dear PT:

I get the part about the put and the call but why should you wind up with half if it hits the strike price on the nose. Seems to me you walk away with the same stock you had b4 plus you are ahead by the amount of the premiums-like creating a dividend with a stock that doesn't pay one. But if you have sold a put (bullish) and the stock dips below 25 on expiration (downward dips on exp. for that day alone are not unusual)then someone puts the stock (because it is worth less than 25) to you and the only thing to offset your downside is the premium you made selling the options. On the other hand if the stock closes above 25 you are called away (shorted calls) and you lose the profit above 25 which is mitigated only by the premiums of the option premiums. Why go through all the gymnastics. What am I missing?
If you need to do something on Dec. whatever just do it without all the transaction costs.

By the way what does the "E" stand for?

Oh well have a nice weekend.

JF Dowd
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