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Strategies & Market Trends : Selling Puts: Have Cash Will Travel -- Ignore unavailable to you. Want to Upgrade?

To: David Lind who wrote (783)	1/4/2000 11:48:00 AM
From: OX	Read Replies (1) \| Respond to of 1235

>>>what are you looking for when you select a strike price? I look at all the possible supports for the underlying. I like to write puts whose volatility is high relative to its historic. OTM 1 or more strikes away, where I can get at least 1 pt/wk to expiration. 1 expiration cycle out... I have a tough enough time trying to determine direction for several weeks much less several months out :-) the underlying is #1... you have to comfortable owning it.

To: David Lind who wrote (783)	1/4/2000 9:18:00 PM
From: Tom K.	Read Replies (1) \| Respond to of 1235

...what are you using for TA, if I may ask? What are you looking for on your charts?... David, if there is one thing I've learned the hard way is that the underlying is the most important. Therefore I spend time researching stocks. To put in perspective, however, once I find one I like, e.g, DELL, I put it on my list of interesting issues. This list doesn't change that much so then it is just a matter of my staying abreast of what's happening with the companies on the list (SI is one place to look). Once in a while I'll drop a stock or add one. From here. I will simply watch for what I believe is the opportune time to make a sale on one or more of the issues. As an aide in this decision, I'll look at Bollinger Bands and Relative Strength Index.... but, just as a guide, not a hard rule. Once I think the time is right, I look for an out of the money contract within about 8 weeks that will give me a lot of cushion for a good return (% wise). I've developed a couple of Excel models that help me with the assessment, but I found that often times the knowledge of the issue and how it behaves is better than a numerical indicator from some formula. Then I make the trade and monitor it. If it behaves solidly I'll hold to expiration. If I get uncomfortable and it is profitable (or has little left relative to the time remaining), I'll close it out and take the profit. Example: I had Adobe 60's for Jan with a $6000 premium; this morning I got nervous and closed them for only a $2000 profit. Did I give up too early? I don't care. I try not to be greedy (that's difficult to master). Sorry I got wordy.... just trying to be helpful. Tom