Ascend Communications (ASND) Message Board

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Technology Stocks : Ascend Communications (ASND)

ASND 211.08

-0.6%

1:24 PM EST

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To: Greg h2o who wrote (37474)	3/4/1998 12:24:00 PM
From: George Coyne	Read Replies (1) of 61433

<< <<The risk and rewards to the investor is identical.>> You are wrong on this. You have completely UNLIMITED exposure in selling a naked put. >> Greg, I used to think as you are, but I've come around to Glenn's thinking. Consider what happens in the limit in either direction. DOWN: The underlying stock goes to 0 (zero)from 20. If you have sold one 20 Put contract, you lose $2000. less your premium. If you sold one 20 covered Call contract, you lose $2000. (the stock value)less your premium. UP: The underlying stock goes from 20 to 40. If you have sold one 20 Put contract, you make your premium. If you sold one 20 covered Call contract, you make your premium (and DON'T get to keep the appreciation, since your stock will have been called away) Make sense? G. W.

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