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

To: SJS who wrote (13618)	10/27/2000 2:46:35 PM
From: Big Sky	Read Replies (1) \| Respond to of 24042

SJS, I will re-pose Larry's question because I've been considering selling puts as a way to buy on the pullbacks while reducing my basis, but I am concerned about the potential exposure as my friends tell me that writing a naked option is dangerous. The question: What is my downside exposure if I sell puts on JDSU? example: I sell 10 Nov 70 puts @$3, netting $3000. Now let's say that JDSU dives down to $60, and my puts are exercised so I am forced to buy 1000 sh of JDSU at $70. By my calculation I now own 1000 sh of JDSU at a net basis of $67, so I've lost (on paper) $7000. Am I correct? My paper losses will continue to increase if JDSU continues down, but I can limit my downside risk by entering a stop order at $67 or below at the time that I sell the puts. Thanks in advance for your response. I've appreciated your insightful posts on this and the AMCC boards.