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Strategies & Market Trends : Options -- Ignore unavailable to you. Want to Upgrade?

To: avanti77 who wrote (2818)	2/12/2000 9:52:00 AM
From: Jill	Read Replies (1) \| Respond to of 8096

I've ocasionally written higher strike puts on leaps. The question you ask yourself is: Will JDSU be higher than 240 in September? Your guess is as good as mine. You also look at the cost basis were you put: I recall getting about 38 for those puts so were I put in Sept it would be 162. It's really a matter of the risk you're willing to take--and the margin collateral they'll hold against it. I tend to try and write "safe" puts if there is such a thing. Most likely on the next runup of JDSU I'll be buying back the Septembers as they deteriorate, and taking profit, and selling others.

To: avanti77 who wrote (2818)	2/12/2000 10:08:00 AM
From: Poet	Respond to of 8096

Hi Donna, As usual, Jill said it very well. What prohibits me from selling puts that far out is: 1. my concern that we haven't finished a spring Nas correction, so I think there's chance to get better premiums). 2. the amount of margin collateral held on a put sale over that long a period bothers me. I've tended to ficus more on the short term. Howver, I see the more sophisticated options traders here selling the Sept series, so there must be some advantages I haven't fully grasped.

To: avanti77 who wrote (2818)	2/12/2000 12:41:00 PM
From: PAL	Read Replies (1) \| Respond to of 8096

Sept.240's have a premium of about $70. If I got the stock "put" to me in Sept, I would effectively be paying $170 a share. If your objective is to retain premium, and you are a beginner, I suggest that you start with SOTM puts. For example Sep160/jdsu put at around 24 which gives you a lot of cushion and safe play up to 136. Don't follow ed blindly. he is a pro, and acts swiftly if things goes the other way. he has several emergency exits in place. by the time he shares his moves, it is probably too late. selling put ITM especially DITM can wait until later time. Paul

To: avanti77 who wrote (2818)	2/12/2000 2:21:00 PM
From: DM	Respond to of 8096

If you are bullish on the stock, then going in the money is fine. Just make sure that if the stock is put to you early that you can buy it. DM

To: avanti77 who wrote (2818)	2/13/2000 9:33:00 AM
From: edamo	Read Replies (1) \| Respond to of 8096

donna...."jdsu sep240 puts" nothing wrong with that strategy, i did the 200's for several reasons, which if correct can cause the premium to erode by about half within the next sixty days...the same would apply to the 240's. we must assume a flat to upward bias, the stock will split on 3/10?, potential of addition to s+p?, and strong probability of leap contract availability announced mid may. the leap contracts in itself will skew the short term implied volatility as it alters contract supply and demand. was very successful doing the same with brcm dec 310, with the stock at 290.......catch it a good point and you profit. jdsu appears at a good point, stock dropped, but so did put premiums, a reflection of supply and demand.... boldest move was selling dell 0160's and 55's (i should have covered early jan with the stock at 52!!!!), which gives me a assigned cost of 34....now above by 10%, so in essence i'm moving point by point with the underlying as all volatility factors about gone, no different then me going long today....it has tied up capacity, perhaps better use of same, the cash in was reinvested and has had better then average returns (emc at 35 split adjusted) but at times you have to assume risk to see if a strategy will work in the real world!