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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: pater tenebrarum who wrote (26404)	9/20/1999 5:34:00 PM
From: yu	Read Replies (1) \| Respond to of 99985

Heinz, First, thanks for all the very convincing and educational posts you did on this thread. But I must say, you are too convincing for my financial health. ;-) And why buy puts instead of sell calls if you really think the market will fall? MAR 2000 130 call is $12, this means it has to go up another 12% to $142 for you to lose money. Buying puts MAR 2000 125 put costs you $8 1/2, this means you are willing to take the risk to losing another $8 1/2. So compare the two strategies, you will end up worse only if QQQ goes up to $150.5 (NDX 3010) or higher. And the chance of that happening by 3/2000 should be very small. But buyers beware, I tried this once (selling naked calls) and got hurt badly. And this requires a lot of margin. However, I think the theory is sound and would work in the long term if you can sell call consistently and wait for the drop patiently. Sell long term LEAP calls would probably work better too. What do you think? -yu