Wilander, Hello!
1. Advantages of puts:
A. You can win if the stock doesn't move, or if it drops a little
B. You can roll them out, bring in greater premium if they go south
C. Your profit point is always lower than with calls
2. It's better to know a few stocks well than many partially
One stock can make you rich. I don't believe in second tier stocks.
3. Dell has made me more money than any other issue. It gained
9,200% in 5 years. I've always got a hundred or so puts and calls going on Dell. Here's an example:
Recently I sold Dell 8/120Ps for 13.25, bought them back today when it looked like we were going to see another nosedive for 15.25; lost 1.75 per share. What to do?
I rolled out the 8/120Ps to 00/120 Leaps for $32.00 and sold 8/105Ps for $4.50, bringing in $36.50 total. Allowing for the 1.75 loss I'm 34.75 ahead, including the original premium of 13.25.
If Dell dips I can roll out the 105s also. My new breakeven is $85.25. Later, if necessary, I can roll the year 2,000 leaps to 2,001 as my back is not to the wall.
3&4. I'm a private investor, not an investment counsellor, do not make recommendations as to specific plays or stocks. I hope you understand, wilander.
My best to you!
Don |
