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Technology Stocks : JDS Uniphase (JDSU) -- Ignore unavailable to you. Want to Upgrade?

To: t2 who wrote (5350)	1/27/2000 11:16:00 AM
From: SJS	Respond to of 24042

True enough, but here's the issue with that. PUTS decrease in value with time. If you buy your puts 1 month out for the earnings event, they will decay tremendously while time move toward the event. So you buy up a day or 2 in advance, and pay up. For example, if a hurricane is coming, you run down to HD and buy 4x8 plywood sheets to board up your windows. They guys says they've doubled in price, due to demand and fear. Guess what? You buy them anyway. That's sorta what I'm defining here. YOu can also not buy it and take your chances....but look at the numbers (and these are NOT my numbers, but I wish!!): Let's say someone own 1000 shares of JDSU. At 224, you've got a small fortune in this stock. $224,000. If the stock drops 10%, you're down 22K. If you buy half your position in puts (in this case 5 puts), you'll spend 5 x 14.5, or 7200 bucks, or about 3% of your asset base of 224, 000 for this protection. Now if the stock declines, you'll get some appreciation of these puts and could even make a little money. Remember, your protecting for catastrophic drops for some unforseen event. If not, buy them back for 11 or 10, and take a $2000 loss for the trouble. That's not a bad idea. Work the number for your own situation, it may make some sense with your own number. Steve