Roger's 1998 Short Picks Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Roger's 1998 Short Picks

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Gotham Guru who wrote (13796)	9/16/1998 5:36:00 PM
From: Kevin Podsiadlik	Read Replies (2) of 18691

Here's one reason why selling naked puts is probably not so hot. Let's say that your Oracle $20 put (you don't specify a time frame) nets you about $1 per (that's roughly what a March put would net you). So consider this: ORCL price on 3/19/99: Gain/Loss from selling Gain/Loss from buying 1 put (naked) 100 common (at $27) $10 -$900 -$1700 $15 -$400 -$1200 $19 0 -$800 $20 $100 -$700 $25 $100 -$200 $28 $100 $100 $30 $100 $300 $40 $100 $1300 $60(MSFT buyout) $100 $3300 The point is, sure, you're exposing yourself to much of the risk should Oracle turn into Cendant (or the bear market return) in the next six months, and almost none of the reward should good things happen to Oracle. And it only takes one trade gone wrong to wipe out the profits from a half dozen or more successful ones. James Cramer is not as diplomatic about it (subscription or free trial required): archive.thestreet.com A salient quote: "In 20 years of trading options I can tell you that I have pretty much seen everything that is going to happen and the only time I have ever seen people forced out of this business or had to be liquidated is because they sold puts. The only time."

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next