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

To: David Lind who wrote (1032)	1/25/2000 4:32:00 PM
From: taxman	Read Replies (1) \| Respond to of 1235

"buying a put on a severely overbought stock or two" this is logical, but usually inadvisable. the stocks with the most relative strength tend to remain relatively strong even in a market decline in my opinion. severely overbought is subjective. i would tend to buy puts on the relative dogs. have been successful using value line's untimely stock recommendations to buy puts on. as you were interested in opinions, you now have mine. regards

To: David Lind who wrote (1032)	1/25/2000 4:54:00 PM
From: Tom K.	Read Replies (3) \| Respond to of 1235

...what are doing to hedge your NP portfolio, if anything?... David, my hedge is built into how I trade. Here's what I do... 1. Operate to a plan (I know exactly what my goal is each month); 2. Research the stocks (only the best make my list and earnings is the strongest key); 3. Watch the rhythm of the market and the stocks (sell PUTs on dips); 4. Analyze the available PUTs for reasonable return; 5. stay near in. I have just now begun some March trades (60 days out).... the exception is on a roll out to repair or a LEAP which can sometimes be used as a cash account to draw upon; 6. Diversify.... I never have everything in one issue; 7. Don't be greedy.... leave plenty of cushion; 8. if available (sometimes they are not), buy a protection PUT. 9. keep some collateral available for the fluctuations; 10. Be prepared to exit (when the profit is reasonable) and to repair when there is problem.... but not too early where time premium is a factor. 11. Don't be afraid to take the stock and sell CALLs to get out profitably. David, that's my approach. My hedging is built into the way I trade. Doesn't mean it's the best or that it is even correct.... but it works for me. ... I'm looking for 30-35% return on the total margin... Return on the margin? do you mean on the base investment? annualized? Good luck. Tom