Waiting for the big Kahuna Message Board

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Strategies & Market Trends : Waiting for the big Kahuna

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To: Philipp who wrote (25977)	9/1/1998 8:06:00 AM
From: Pierre J. LeBel	Read Replies (2) of 94695

Hi Philipp - Do not worry so much about the huge premium on puts. The same was true last week. Premiums were out of sight. So what! I paid a lot of premium last Wednesday and Thursday when buying DELL and OEX puts and received even more premium when I sold them yesterday! Should the market continue to go down next week, premiums will not shrink, on the contrary, you will see VIX going through the roof as happened in 1987. What is the alternative? I have seen a lot of people last week predicting a severe drop in the market and yet, they did not profit because they refuse to pay a high premium on puts!!! The best way around the high premium is to work with spreads: while you pay a high premium on one end, you receive it on the other. Look at OEX 500/470. How is that for premium! Have a very nice day. Pierre

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