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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: niceguy767 who wrote (83523)	12/18/1999 12:06:00 AM
From: Niels	Respond to of 1572982

-niceguy767 I am not sure I know what you mean by a covered put. There is a way to completely hedge a (European) put, but it involves writing a call, buying the stock and borrow. The fact is that writing a put compared to writing a call is a conservative strategy which involves much less theoretical risk. By writing a put your downside risk is limited to the strike price minus the option premium while writing a naked call exposes the writer to potentially unlimited downside risk. Best Niels

To: niceguy767 who wrote (83523)	12/18/1999 11:31:00 AM
From: Richard Wang	Respond to of 1572982

Nice, writing puts is a bullish strategy, but necessarily the best extremely bullish strategy. You would hope the underlying stock has good support nearing a bottom, or when a stock is rising, you hope the stock would keep going up, or you write when the stock is taking a rest and falling down a bit. If you do have the stock put to you, it's OK, because you think the stock would go up. If you are extremely bullish, expecting the stock to go up leaps and bounds, you would long the stock, and/or buy out of money calls. You could still write puts, but you are limiting your gains. If you are bearish on a stock and expect the stock to go down, you definitely and positively would not write puts. Richard