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Technology Stocks : JDS Uniphase (JDSU) -- Ignore unavailable to you. Want to Upgrade?

To: Liatris Spicata who wrote (13607)	10/27/2000 1:55:22 PM
From: Wyätt Gwyön	Respond to of 24042

. If I spend $10K to sell to open a put If you sell a put for a debit of 10K, your broker must have very high commissions!

To: Liatris Spicata who wrote (13607)	10/27/2000 1:57:55 PM
From: SJS	Read Replies (2) \| Respond to of 24042

Larry, Typically, in this universe, when one sells something, one TAKES IN MONEY. You don't expend it. That being said, if you reask/reform your question, I will try to help you. Steve

To: Liatris Spicata who wrote (13607)	10/27/2000 2:44:02 PM
From: Kayaker	Respond to of 24042

Larry, I shorted puts (sold to open) on QCOM the other day. When the stock was at about 70, I shorted 10 contracts of the Jan 70 puts for about $10. So, I immediately received $10,000. If QCOM is above 70 on Jan 19th nothing happens; I just keep the $10,000. If it's below 70, I get "put" (am forced to buy) 1000 shares of QCOM at a price of 70. (It all happens automatically. I'll find the shares in my account on Monday the 22nd.) Note that my net cost would be $60 since I received $10 per share at the beginning. Of course, at any time before Jan 19th I can buy back (buy to close) to close out my position. Note that it is possible that I could be "put" the shares at any time before Jan 19th if the price of the stock is below $70. Note also there is a certain collateral requirement here, i.e., I must have the available cash or margin to accept the shares if they are "put" to me. Shorting puts requires a higher level of approval from your brokerage. Highly recommended: amazon.com

To: Liatris Spicata who wrote (13607)	10/27/2000 4:20:28 PM
From: SouthFloridaGuy	Read Replies (1) \| Respond to of 24042

Larry - if you received $10,000 for shorting some puts (let's say JDSU yesterday) for the 65 strike, you would have sold 10 contracts since they were selling for $10/option. Now, if JDSU stayed above the 65 price at time of expiry - in this case it is Nov 18th, then you would have pocketed 10 grand. If JDSU was under 65 at expiry, you would be obligated to buy 1000 shares of JDSU at 65. This can or could not be a good thing. If you're like me and like JDSU for the long-term, then you wouldn't care owning it at 65. Your breakeven price is actually 55 since you pocketed $10/share. Indeed, if JDSU is trading above 55, you still win out net-net. Most brokers will not allow you to sell more callable puts than your net equity. It's a great way to buy a stock a little cheaper if you're unsure of short-term movements or its in a trading range. My father made a lot of money in the 70's and 80's doing it.