Formerly About Applied Materials Message Board

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Politics : Formerly About Applied Materials

AMAT 341.36

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Jan 29 3:59 PM EST

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To: Lane who wrote (13329)	12/15/1997 9:43:00 PM
From: Lee Penick	Read Replies (1) of 70976

Lane, Off topic... RE - "question: if you have a short put position that is in good shape and could buy back at over 60% gain, but expires in couple of months, is buying it back and rolling out for more credits reasonable? Should not effect the margin as already dealing with the same strike and selling more time. Only draw back is margin tied up for longer period of time. What are your thoughts??" I believe the proper way to evaluate this is as follows: Say for example, you would make $500 for holding it 30 more days if it expires worthless. you make $500/30 or $16.67 per day. Say you roll forward and could make $900 for 60 days if it expires worthless. You make $900/60 or $15.00 per day. So you want to calculate where you are selling the most time value premium per day and sell "that" option. Generally I believe you make more by selling month to month, than by selling a quartly or year long option, but then as the month winds down and the time value expires, recalculate and sooner or later, it will probably be better to roll forward. don't forget to consider the extra commissions for doing this. Have you found a good broker for naked options. I'm paying a little too much in commissions with mine. Your comment on Dell interests me, but I don't have time to follow any more companies, and don't want to invest if I can't follow what is happening. My timing is already bad enough! take care, Lee

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