>> Well, if you dont have a problem owning that stock if its "put" to you at that strike price its not as risky as you think. <<
Writing naked puts is a stupid foolish thing to do. Just when you get comfortable and think you have a good strategy of collecting your premium like a paycheck each month, the market crashes in a mass panic and every gain you have worked for years to achieve is wiped out in a single day. Stable companies like PG dropped 8 points in 15 minutes back in 1987.
Anyone who thinks writing naked puts is a sound strategy should go back and read some history about what it was like during the crashes of 1929 and 1987.
Especially if you write these puts through an online broker. Just imagine yourself watching your favorite blue-chip drop 10 points in a matter of minutes while you are frantically trying to log on to your broker to cover your naked put position. Of course the whole internet will be jammed packed and people will try to get through on the telephone, but the phone lines will be jammed as well.
Trust me, if we have a colossal crash...no, make that WHEN we have an epic crash, longs will not even be able to get through to save their skins. Only the wise who have kept a few shorts on will survive. Shorts will be pleased that they couldn't get through to their online brokers, because they probably would've covered after their shorts dropped 20-30%. By not being able to cover, they will probably get an additional 20-30%.
The vast majority of the investing public doesn't have a clue that they are setting themselves up for one of the biggest financial disasters in history.
All these people that are fooling themselves by thinking they are safe owning M$FT, C$CO, DELL, GE, KO, or whatever are sheep being led to the slaughter.
If you think you will never lose money by sticking with M$FT, go read up on a company in it's heyday back in the 1920's.
Here is a brief history lesson on the premiere growth company of the 20's. The company that was being pursued by the government for monopolistic practices. The company that owned all the patents and controlled the new "wireless" medium, the way Microsoft controls the operating system. The growth company that everyone in America knew of and owned in 1929. The company from which NBC was spawned.
The Microsoft of the 1920's.
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