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

To: Jill who wrote (7592)	5/5/2000 7:31:00 PM
From: Tom K.	Read Replies (1) \| Respond to of 8096

...How about you? I'd be very interested in hearing about your successful put positions and how they held up in recent times.... I'm doing OK, but that is probably due to my conservative approach. I'm willing to take a 30% annualized return on my base as acceptable (although I generally always do better). This means I can stay far OTM and also keep enough aside as collateral that should I get PUT, I can take it at the very low exercise price. Hence, no margin calls. Also, I'm particular about the issues I deal with. They must be top earners (IBD EPS of 90 or better) with consistent quarterly earnings track records. That's not to say I don't occasionally stray and get singed. Managing greed is the toughest issue. Some of my April PUTs got profitable early in the month so I closed them out. I got nervous and didn't want the stock so closed two issues early for a loss, but I should have been more patient. In the end they closed OTM. I also had some MSFT shares that I accepted on a previous PUT that I took a loss on to get out. But that was because I got greedy and could see some nice CALL premiums if I went long the stock.... right. For May, I've closed 2 trades profitably and now have PMCS 150, MERQ 80, and JDSU 100 left. These were sold in late March, early April and I'm watching them closely. When we get to expiration day, I'll decide to close, expire, or be PUT. I'm comfortable with any of these. Don't see much risk relative to the strategy. This week I tried applying my approach (i.e., philosophy and rules) to the bear side of the market by selling ADBE 140 May CALLs and SDLI Jun 230 CALLs. Same approach.... if it rises to the strike, I'm prepared to buy. My problem here is with the long bull market we've had, I've not tried this side before. This will be a good learning. ...all you can lose on a call is your investment... For the past month wouldn't that equate to everything you put in? With the PUTs, at least I can own the stock albeit at a lower price. Tom

To: Jill who wrote (7592)	5/6/2000 8:57:00 AM
From: edamo	Respond to of 8096

violate a basic rule of put selling..."always have the capacity to accept the assignment"...."always" means "always"....if not you are in over your head, and margin problems can ensue... you can't lose anymore then owning the common at a discount, if you have discipline and capacity, very profitable......but leverage your way up, fail to see a topping, for whatever reason, normally greed and belief of opportunity loss, and the strategy which you believed to be conversant in goes against you.... margin god doesn't exist....you have to conjure him up...