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To: excardog who wrote (883)	3/3/2001 1:45:22 PM
From: Tommaso	Respond to of 23153

I can tell you exactly how to play a drop in the DOW. You can buy puts on the average for December 2002 at a strike price of 140, symbol YDXXJ. The latest quote is about 27.75, which means that for $2,775 you have the right to sell the Dow average as if it were at 14,000. Since it is presently at 10,466 these puts already have a built in profit or value of $3,534. Providing the Dow is no higher than it now is, in December 2002. As I need not say, one is not obligated to hold the put until that time. Now I am venturing into the pie-in-the-sky scenario, but if the Dow should sink to 8,000 and remain near that for some time, each of those puts would be worth $6,000. If anyone can see anything wrong with my valuation of the Dow puts, I sure would like to know about it. The only way I can explain their price is that there are some terribly overconfident people who believe the Dow will be in the range of 13,000 and higher some time in the next eighteen months.

To: excardog who wrote (883)	3/4/2001 9:32:08 PM
From: energyplay	Respond to of 23153

If your buying insurance, way out of the money works pretty well. But even for that, I would stagger what I bought - If Dow is 10,000, and I thought it might go to 7,500 Then one put at 9,500 (an expensive one) then two at 9,000 then maybe four at 8,500 Indexs generally drop in stages, as cash moves from weak to strong (or less weak) stocks. If you are too far out of the money, the index may not get near your strike price in time. If your insuring for a general market drop, try to get long dated puts. If you have a specific time frame (say, you get 3,000 shares of GE on September20, 2001) you probalby only need to go about 6 weeks or more beyond that date. I generally would not cut closer than one month, the time value loss of the option tends to mess up the gain on the hedge. You may want to get a good, non-technical book on options. McMillain on Options is okay. His Options as a Stratgic Investment is very technical. By the way, he used to work at Bell Labs. Also, you want to watch your prices & underlying index price direction and bid/ask spreads. Using limit orders can sometimes help with large spreads - put out you order as a day order, and someone may hit it. Short term technical work, Like the Candlestick stuff, seems to work well here. My point of view is that the Dow will be one of the last to drop, and may not drop until late fall or 2002. So I look at IAH, SOX & QQQ (Naz 100) Best of Luck