Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Non-Tech : Invest / LTD -- Ignore unavailable to you. Want to Upgrade?

To: SJS who wrote (12761)	3/30/2000 8:14:00 PM
From: Thean	Respond to of 14427

Steve, It is not as if this is first time the shoe drops out on the Nascrap stocks. It has happened twice already this year. I think people will get into trouble if they want instant profit and never built cushion into the downside. Selling puts is the safest bet there is that I can get my hands on. Why? Roll over if necessary. It is only greed that says all sold puts be expired worthless at the end of each month. The law of statistics says this will not happen month in and month out. Think of it this way, if you sell 5 puts, the worst case is you have to roll over all of them. Would you lose a penny? No! The only thing you lose is you have to wait until another month to see if it gets to expire worthless. If not, roll over again. With the time premium the street is willing to offer us on the tech stocks, I can keep rolling over CNXT every month and drop my strike price down by $5 each month and still collect some net profit each month. If I have to do that for the next 8 months (consider the worst case), my cost basis of CNXT will be about $40-$50 by December this year and I still not lose a penny. Therefore, where is the risk? I definitely don't think writing naked puts is for the not-faint-of-heart. Rather, it is even more conservative than buying stocks. The only requirement is one has enough buying power and not go over margin. Once I have my million bucks, I am going to start earning CD money like bw and use that as collateral to write puts every month. You are aware that INTC sells put every month as part of their stock buyback strategy. I guess their CFO agrees with me that selling puts makes more sense than buying stocks outright! The Nascrap of the last 5 years has taught many people to expect more than wazoo as if they would feel bad if they don't make 100% return each month. One only gets disappointed if the expectation is not met. But then, who sets the expectation that is so unreasonably high by any historical measure? Who is to blame? During this sharp downturn, my strategy is to write some more puts. I missed out on TQNT Apr 70 put today. Thought I would surely have gotten filled at 9 but no luck. The disparity between the time premium on call and put is so huge on TQNT that the chance is very good TQNT has reached bottom again today. Its option MM's certainly think so. It bounced off supports anyway at 67-68. I also try to rotate stocks because when this thing reverses one would miss out plenty.