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the difference between writing puts on the s+p and against an issue such as dell, is that dell has a long term product associated with it, that can take you out a max of 39 months on the horizon, and every may you get another year extension...this gives you a safety net...bear markets don't last that long...you can take delivery of dell if it is put to you, you can't have the s+p put to you...puts against cash on an underlying equity are tangible, puts against an index is cash/cash, no chance for recovery or repair, or reversal of writing calls in a down trend...basic rule only write puts against cash if you have the capacity to accept the long position if put to you, only sell against an issue which you believe in long term...very little risk, very much reward, sleep very well at night, don't worry about short term gyrations...i see you like leaps, comment on the following puts i wrote...7/18/97 intc 00100 (lnlmt) @ $20.50, 10/21/97 sunw 0055(lsumk) @17.50, 12/31/97 cpq 0040(lkpmh) @ 14.50, 5/15/98 dell 0042-1/2(ldemv) @ 8, 7/23/98 hwp(zhpmm) 0165 @13.50,8/21/98 dell 0150(zdemj)@11.50...at any given time early in the position i was upside down...but all very profitable at this time...good risk reward ratio |
