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

To: Liatris Spicata who wrote (13705)	10/29/2000 8:37:00 PM
From: Kayaker	Respond to of 24042

If I sell $10K worth of puts on XYZ, neither you nor anyone else can tell me what my downside potential is, but it could be considerably more than $10K. I shorted 10 contracts of Jan 70 puts on QCOM for $10 (and therefore pocketed $10,000) when the stock was at about 70. If the stock dropped in price and the 1000 shares were "put" to me (at a price of 70), my net cost would be $70,000 - $10,000 = $60,000. The downside potential is $60,000 if the company goes bankrupt and the stock goes to zero. But note that my downside potential is actually less than if I simply purchased the shares at a price of 70. In that case the downside potential is $70,000. For shorting puts, the bottom line is you have be sure you have a solid company and you are buying at a good price; no different that when you are buying shares or calls. Just my 1¾¢.