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

To: Investor2 who wrote (812)	1/7/2000 12:33:00 PM
From: David Lind	Read Replies (1) \| Respond to of 1235

Then my response would be that while LU is unlikely to have further weakness, and in that sense would be a very good candidate for a put sale, the puts themselves are somewhat cheap. (Although Feb 50s don't look bad @ 2.8) With the market turning back, there may be better plays to make in stocks that have been beaten down, and have more volitility, and therefor higher premies in relationship to the underlying stock. In summarizing the strategy, IMHO it is to (1) Sell the put on a stock with a long term uptrend that has pulled back temporarily (the market is flush with them right now), (2) Compare the premiums to similar stock candidates to insure that you are getting an adequate reward and credit, (3) Set a strike price comfortably OTM at a level below what you feel is support for the stock, (4) Be very comfortable owning the stock if it should be put to you, and (5) Consider exiting the position, or other strategies, if the stock begins to move ITM. www.optionclub.com is a great site for quickly comparing option pricing and strategies. -David