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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Tommaso who wrote (87279)	12/20/2000 12:30:59 PM
From: Knighty Tin	Respond to of 132070

T, The problem is, by buying a put that is deep in the money, you are escaping pure premium but taking on principal risk. If I thought the Dow were going to 8,000, and I believe it will go through it like a hot knife through Parkay, I would tend more toward the out of moneys and less risk/higher return. Of course, the odds of making some money are much higher with the in the money put. The good news being that if the index runs against you, the put will start picking up pure premium at some point, to cushion any loss.