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

To: Tom K. who wrote (881)	1/22/2000 9:03:00 PM
From: taxman	Read Replies (1) \| Respond to of 1235

i have everything you mentioned except the grandson, but that's not the issue here. i respectfully disagree with the soundness of your selling put strategy. by selling puts you miss the staggering runs stocks have made in the market. all you make is the premium, but you risk the stock going down. to make my point assume you thought the market was going down and you started selling calls naked on all the high flyers. in all likelihood, your net worth would have been reduced to zero. you say a $25,000 base will grow to over $1 million in 15 years--well i've done it in four years and that is with buying puts as well as calls and with a lot less risk. most reasonably aggressive mutual funds have done better than the 30% plus return you are talking about and, of course, with a heck of a lot less risk. make no mistake about it, you stand a chance of being wiped out if the market crashes and you're short puts. i know the old story about wanting to own the stock anyway but the margin calls are going to force you out at the bottom. in my case, i'm holding plenty of puts long just in case the bull market ends. furthermore, i've made plenty of money on puts even with the popular indices at record highs. last week my next door neighbor brought me a present, a copy of "The Millionaire Next Door", because i am the millionaire next door and i'm helping her become one too. just my opinions based on my experience. hope you change your tactics but it's your money. regards