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Technology Stocks : Network Associates (NET)

NET 202.13

+3.3%

3:59 PM EST

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To: AlienTech who wrote (4927)	4/13/1999 4:57:00 PM
From: Just_Observing	Read Replies (2) of 6021

Normally one does not use a deep in the money put for bearish moves. It's easier to short the stock and cheaper too (you don't get ripped off by the spreads). You can use puts to lock in gains without covering your short. For example, if you were short 1000 shares at 30. You could cover at 16 5/8 to finish your transaction. Or you can sell 10 puts at 7 3/8 to lock in profits. The only advantage in doing that is that you can convert a short term gain into a long term gain. But the risk is there that the stock may rise above 25 and you don't get all the gains. And doing that just for a month does not make sense. Now if you wanted to buy the stock and did not want to put up the money, then you sell deep in the money puts. Or if you had sold naked calls earlier, you hedge them by selling deep in the money puts (say you sold the May 15s or the 20s). If forced to take a position, I would say that deep in the money puts, with no time value at all, is overall a bullish indicator. The combinations of possibilities are endless. But I must end now. Good Luck

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