Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Gottfried who wrote (32761)	10/8/1999 12:44:00 AM
From: Jerome	Read Replies (2) \| Respond to of 70976

"He sold the Jan 25 puts" This was a method of raising cash off of his portfolio. My Fidelity stock screen indicates that the Jan. 25 puts traded today at 0 by 3/16. times. From this he netted .1875 times 100 times 2000 or $37,500 It was a risk free transaction. AMAT has almost no chance of reaching 25 by Jan. short of some catastrophic event. His other transaction was to buy 400 Jan. 45 puts and todays price was 7/16 by 9/16. So these contracts cost him about $20,000. (I used a purchase price of 1/2 times 400) These puts will appreciate in value if AMAT drops to the 65 to 70 dollar range. If AMAT's price drops about 10 points both positions will turn out profitably. As the price of AMAT drops he could close out both positions simultaneously or individually as he saw fit. It could have been a mutual fund trying to generate cash from a portfolio. In neither case does he want the price to reach those levels. He just wants the price of AMAT to go lower for a month or two. This my interpretation of these transactions. I'm open to a better reading if someone cares to try. Jerome

To: Gottfried who wrote (32761)	10/8/1999 7:43:00 AM
From: robert b furman	Read Replies (1) \| Respond to of 70976

If you sold January 25 puts,you would receive a cash credit in your account but you would also have committed an even huger amount of purchasing power 2000 x 100 x $25. Selling puts naked is a slightly bullish strategy in that you are committed to buy AMAT at 25. If amat stays above 80 until the third friday in january,that buyer keeps the money. The next step of buying jan 45's gives him a spread or straddle or butterfly (its over my head ).Thats why people buy software like option station.Perhaps playing two different exchanges enables a better premium play which put less risk into the position. I currently have some Oct 75 puts that I sold 2 months ago.I am patiently waiting for them to expire worthless on October 15 or I would also gladly buy the AMAT at 75.Either event would please me.However after yesterday's 4 plus point drop my in the money cushion sure did get whittled down. Bob P.S. Somebody plays strong and has huge Kahones !!! Bob