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

To: taxman who wrote (899)	1/23/2000 12:43:00 PM
From: TheHahnz	Respond to of 1235

<<you are correct as long as you can guarantee me that the stock cannot go below 135>> Lets compare the stock purchaser to the put writer in a "panic" scenario for the BVSN example... Assume both are prone to panic and each decide to bail after a 20pt down move-- 162 to 142 over a few days --- The purchaser of the stock loses 20 pts... The put writer covers his put that he wrote @25 somewhere between 35-40 depending on the options'delta... Again the put seller comes out ahead... OTOH; if the stock does zip ahead to 300 over the next few weeks, the put seller will no doubt will make miserable company for while <g>... TH

To: taxman who wrote (899)	1/23/2000 12:47:00 PM
From: OX	Read Replies (1) \| Respond to of 1235

everyone... it's been stated many times that one can't sell puts on just any underlying. underlying, common, natural... rule #1. I for one don't sell NP on anything resembling a inut stock. I'll take the relative sleepers who typically have the same rare chance to skyrocket as they are to tank. Take a stock like Disney. Sure you can miss a good sized move up. Will it go to zero? not likely, but it can. will there be warning signs before? most likely. non-fundamental knockdowns? sure, those are buying opps. these are the reasons I play month-to-month. if a stock moves up, there's nothing to say you can't close the put for profit (or not) and open another NP higher to take advantage. the key to any strategy is wise money management and gauging risk-reward.