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

To: Cutthroat who wrote (896)	1/23/2000 10:49:00 AM
From: TheHahnz	Read Replies (1) \| Respond to of 1235

Re: risk of put selling let's assume you are interested in taking a 100 share position in broadvision BVSN which closed @162. The feb 160 puts are @25. You can buy the stock outright for 16K or sell 1 feb 160 put and receive $2.5K. if stock continues up... your put position retires and you pocket the premium for a 15% gain for 4 weeks hold. You hav'nt accomplished your objective of owning the stock, but you could repeat the process in March. If stock rockets to $200/sh you have missed out on extra 13 pt move (38 pts less 25 pts). if stock goes down... you will have accomplished your objective of owning the stock and the price would have to fall below $135 before you are in a loss position. For this particular example, selling a put is clearly less risky than outright purchase of the stock... Terry

To: Cutthroat who wrote (896)	1/23/2000 5:21:00 PM
From: Tom K.	Read Replies (1) \| Respond to of 1235

... Please be careful when you are selling puts... Cutthroat, Thanks for your concern. I've been in the market for a number of years and I've tried most of the basic approaches when it come to options. I've found that writing PUTs fits my need for a simple and conservative approach that is easy to repair and that provides an excellent return for my investment. My objective is for cash flow on a monthly basis and this approach is doing well for my needs in the current market.... this month's premiums will exceed $20K. But hopefully, I'm not naive. When the market changes direction, I'll shift approaches when the short PUTs no longer work. I'm only in love with this approach while it meets my needs. Thanks again for your concern. Tom