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

To: OX who wrote (857)	1/21/2000 6:39:00 PM
From: tyc:>	Read Replies (1) \| Respond to of 1235

I would certainly not advocate that anyone should sell a straddle on Microsoft. In my straddle position I would welcome the stock being put to me. But that doesn't mean i don't try to improve the situation by making money shorting common when the stock heads south and my puts are in the money. Entering the MSFT apr105 position today, the first thing to recognize is that this is a bull-straddle because the strike is above the current price, and the puts are in-the-money. So the first question one must answer is shall I hedge by shorting the common right away ? Not knowing microsoft, I haven't got a clue; but the charts and Technical indicators would help me. I would rather enter a hedge position close to the strike than wait until the profitability is at risk at the margin. I apologise for having spoken at such length. I have no right to because I have only been playing this strategy for several weeks ! I hope someone will be able to point out the dangers in what I am doing. So far so good.

To: OX who wrote (857)	1/21/2000 6:44:00 PM
From: David Lind	Read Replies (1) \| Respond to of 1235

Regarding repair in my puts account, I appreciate the responses. However, being as one of my standards in life is to keep things as simple as possible, I would probably avoid shorting the underlying or opening a spread in the middle of a trade. It seems to me the easiest solution if the position gets into the trouble is just to roll it down and/or out, since I am going 30 days at a time. Fewer details, headaches and margin calculations. Help me out here folks, but so far my few months of experience seem to say that if I: 1. Stay diversified in high quality stocks 2. Stay way OTM as a condition of the trade 3. Use intelligent money management 4. Put my charting skills to work to open the trade at a nice low 5. Remember that pigs get fed but hogs get slaughtered 6. Never turn off the screen from 9:30-4, M-F Well, then I don't see any huge pitfalls. Am I missing anything here? Thanks, David