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Technology Stocks : CMGI What is the latest news on this stock?
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To: Zed who wrote (4992)2/26/1999 4:15:00 PM
From: Mark Peterson CPA  Read Replies (2) of 19700
 
Zed, the success in the strategy of selling a naked rests in the hope that the upward movement of the stock will bail you out and that you will never get "put" the stock.

Naked put sellers will tell you that if the stock goes down, not a problem, you just roll to another month by buying back your put at a higher price and then selling a put at a future expiration, effectively rolling the position.

All that does is buy time: to hope, wish, and pray that the stock will go up and bail you out.

Although there are some individuals on this and other threads who appear to be comfortable with the strategy and are clearly knowledgable about it, trying to buy back your put in a free-fall market is like trying to catch a falling knife.

I don't mean to say that this is not an appropriate strategy for those who are versed in it. Just that when used alone, there is a commensurate risk attached to it that this 10 year bull market has, for the most part, kept under wraps.

But if you're going to do it, might as well practice. Have someone stand on your kitchen counter and drop them. You try to catch them before they hit the floor.

Get the idea about risk?

Best regards and good investing,

Mark A. Peterson
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