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To: wlheatmoon who wrote (19844)	2/16/1999 3:24:00 PM
From: yard_man	Read Replies (2) of 86076

No, if you sell 10 contracts that gets you 6125.00. You must have something a little more than 50% of the purchase price of 1000 shares in your account to maintain the position (in case you are put the shares), i.e. roughly $10,000. I wouldn't sell the 2000's, not enough premie; I would sell the 2001's. You only sell a put if you are bullish, expecting the stock to appreciate. Suppose you sell the 2001 @ 20 for 9 (I don't know what the price is right now). If between now and 2001 the stock appreciates to say 30, some time value would remain in the put -- let's guess 2 1/2. You buy it back. Your profit is 9 - 2 1/2 = 6 1/2. It is similar in performance to a covered write, except for one very important fact. You take in money that can draw interest in the meantime. With the write, you don't get the interest on all that money as part of it went for a stock purchase. It is possible that you would hold the position until 2001 and the stock would be just slightly above 20 or slightly below it and you are correct about calculating the return holding until exp. The idea is to mine the premie -- selling the put only if you expect the stock to appreciate markedly from where it is at.

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