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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Sam Citron who wrote (37964)	10/8/2000 2:46:47 PM
From: Ian@SI	Read Replies (1) \| Respond to of 70976

Sam, Nice Post. Thanks. Another area to look into would be the relative deltas between the Jan 03 50s and the 130s. I'm not interested in this transaction so I haven't checked. But I'd suspect that the 130s have a delta much closer to 1 than would be the case for the 50s. This might make the DIM Put more attractive to some traders but one still has to offset commissions and the wicked spread on these suckers as well as praying that an early assignment doesn't occur first. Re Margin requirements: For an uncovered, opening transaction, my broker asks for: 100% of the premium LESS any out of the money amount PLUS 25% of the market value of the underlying. Minimum margin requirement is 5% of the market value of the underlying regardless of how far out of the money it may be. Re lurker's strategy: If wrong about the direction of AMAT's price during the life of the option, than you lose. Period. With the 50's or an option that's even further out of the money, one has the time premium protecting one from an early assignment, and, has time working on the PUT seller's side. I'm also not convinced that there's a substantial difference in premium taken for like amounts of margin consumed. I haven't done the Math but I could sell a much larger number of contracts of the 50s or smaller strike price for the same margin required by the 130s. And that could be done with a much reduced risk of a significant loss. IMO, Ian.