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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?


To: Road Walker who wrote (103879)4/11/2000 4:01:00 PM
From: Epinephrine  Read Replies (1) | Respond to of 1571177
 
John,

RE: <If AMD closes on 4/22 at $75 or below, your option will expire worthless. If AMD were to close at $80, your options would be worth $5 per share; $500 per contract. >

True, but if AMD gets back to 75 by the day after earnings there will still be some time value left and I will still be able to sell them, right? Is there an equation for how time value is figured?

Thanks,

Epinephrine



To: Road Walker who wrote (103879)4/11/2000 4:12:00 PM
From: tejek  Read Replies (2) | Respond to of 1571177
 
At least you know how much you can lose. Those that sold puts have an almost unlimited potential for loss.

John,

Do you have to wait to expiry to cash in or can you do it sooner?

ted



To: Road Walker who wrote (103879)4/11/2000 4:19:00 PM
From: Gopher Broke  Read Replies (1) | Respond to of 1571177
 
John,

Actually the loss potential for writing puts is "only" <strike price>/<option sale price>. Sell a $60 strike put for $10 and then the underlying stock goes to zero, you just have to pay $60 for something worthless, equivalent to a 600% loss.

Writing naked calls (in the same way as with selling a stock short) has the real unlimited loss potential.