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To: BDR who wrote (19)	4/9/2000 4:51:00 PM
From: Tom Trader	Respond to of 57

Dale -- a couple of thoughts for you in the context of the example that you posted. First, one needs to make a decision regarding whether the state of the market's internals are such that would warrant the purchase of puts at this juncture. I don't think that there is a need to have protective strategies in place all the time. To the extent, that puts are appropriate, I don't feel that it is necessary to go out in time for more than two months or so. Second, I would use puts on specific stocks to the extent that the position that one has in the stock is significant -- and use index puts for the smaller positions or if the specific stock option is not liquid. Third, I personally am not averse to selling covered calls that are out of the money, on all or part of the positions that I am long, to help reduce the cost of purchasing the puts. In doing so there is obviously a risk that one could end up losing the stock -- but when one considers that over 80% of the options that are bought end up losing money, it is a controlled risk. One can obviously utilize other strategies to avoid the loss of the stock -- if things get out of hand. I would first buy the puts and then sell covered calls on the stocks -- it need not be done simultaneously. As far as the cost of these strategies are concerned -- yes it can be expensive -- but one needs to take that into account in the context of the potential upside that exists. I am willing to pay the cost of insurance -- with a correspondingly lower rate of return on my investments -- provided I am satisfied that the market/sector environment of the stocks that I own has a high probability of upside. It would admittedly be a judgement call to some extent.

To: BDR who wrote (19)	4/10/2000 10:04:00 AM
From: BDR	Read Replies (1) \| Respond to of 57

Instead of buying puts on an index for protection, let's look at the cost of buying puts on an individual stock. JDSU has become my largest single holding so I will use that. JDSU 121.50 (Shortly after the open) 800 share = $97,200 (to approximate the $100,000 portfolio in post #19) June 100 Puts $11.125 (Strike of 100 chosen to protect about 85% of the asset as the 90 strike price did for QQQ in #19) Cost of 8 puts = $9000 plus commissions. More expensive than the index puts but then the index position may need to be adjusted to reflect a higher beta of JDSU. I don't have the answer yet. I am just doing back of the envelope calculations here and putting them up on the thread for comment.