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Technology Stocks : JDS Uniphase (JDSU) -- Ignore unavailable to you. Want to Upgrade?

To: John K_k who wrote (1949)	11/12/1999 12:27:00 AM
From: Guy Gordon	Respond to of 24042

Yes, I sold the Nov 200 calls and used the money to buy the Nov 175 puts. This creates a "fence". Until Nov 19 I am protected for a fall in JDSU below 175, but do not participate in any rise above 200. I will probably wait until Friday Nov 19 to do anything about these options. I expect JDSU to fall further, perhaps to the 160-170 range. So the calls I sold should expire worthless. I won't buy them back unless it's to sell a different call, or I see a turn-around in JDSU. I'll also hang on to the puts till Nov 19. Their job is to protect my ass from a big fall. They can't do that if is sell them. Of course, on that Friday I'll have to sell them since I don't want to sell my JDSU. Note the difference: The purpose of selling the calls was to pay for the puts. So I can buy them back any time, or let them expire. My fence does not protect me from the movement we've seen so far. Well, not 100%. I'm making a little on the put, but not enough to cover the decline in the stock. For 100% downside protection I would have had to buy an at-the-money put for a huge premium. Or, I could have sold the DIM call and been out of all price movement up or down. I think I would have been better off doing that. So I'll consider it when these options expire. I remain bullish long- (and even medium-) term on JDSU.