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To: kapkan4u who wrote (121998)12/11/2000 9:23:47 AM
From: Elmer  Read Replies (1) | Respond to of 186894
 
Re: "I sell puts and cover them by shorting about 20% of my total AMD holdings against the box. Make risk free $2-$4 a share this way"

Can you explain this a little more?

EP



To: kapkan4u who wrote (121998)12/11/2000 9:49:46 AM
From: GVTucker  Respond to of 186894
 
kapkan, RE: I am long AMD and I use the position to generate cash every month. I sell puts and cover them by shorting about 20% of my total AMD holdings against the box. Make risk free $2-$4 a share this way.

Note that this certainly isn't risk free. You basically have entered a new covered short position.

Thus, in exchange for the reward of the proceeds of the put sale, you have lessened your reward if AMD happened to increase in value.


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