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

To: Dr. Id who wrote (7783)	5/11/2000 11:56:00 AM
From: edamo	Read Replies (1) \| Respond to of 8096

jdb...when they get so deep under, (95 strike, stock at 40+), an assignment can occur prior to expiration. as far as repair, why not write some may 45 or 50 covered calls against your new position, either for added income or to get called away. if you are still a believer then hold on to it, your decision. i had jan 2001 aol 200 put to me last year, with an adjusted cost of 115, with the stock at 88 or so. sold half the assignment established a tax loss, and got lucky to sell the balance around 140, prior to the aol/tw deal.

To: Dr. Id who wrote (7783)	5/11/2000 12:36:00 PM
From: PAL	Respond to of 8096

There are at least two reasons for early assignment of a naked put: a. the option is so DITM and close to expriration such that the extrinsic value is negligible, hence the holder likes the sure profit than waiting for next week. he/she probably expects a rally after may 16 which will reduce the value of the option b. tax reason. if he/she sells back the option in market, all his/her gain is ordinary income (short tem gains). maybe he/she has held the gmst stock for more than one year, and the cost of his/her protective put is incorporated into the stock transaction making it long term gain. I am sure that the majority of option players never even consider if their short option positions would be closed by the buyer. Yet are are rare case when that situation arises. Good look on your GMST. Maybe after May 16 the market will get a new breadth of fresh air. Paul

To: Dr. Id who wrote (7783)	5/11/2000 12:42:00 PM
From: Tom K.	Respond to of 8096

...I just had an "interesting" options related experience...has anyone else had this happen?.... Well, talk about timing. I got a call from the broker yesterday that my Jul 90 MSFT were put to me. First time this has happened. I was expecting to wait and roll out as the time premium dropped. Interesting that it occurred in two different accounts at the same time and not for the full amount in either account (16 out of 20 in one, 9 out of 20 in the other). Guess that has something to do with the broker's methodology for distributing the shares. My net was 81.5, so I'm down about 15 on these. Since I'm comfortable with the stock, I'm going to wait a bit as my chart reading says there may be an upward turn, and then I'll start a CALL selling process to recoup the loss. It's slow and tedious, but I really hate losing money. So it happens to us all, JDB. This market is full of surprises. Tom