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Strategies & Market Trends : Options 201: Beyond Obi-Wan-Kenobe -- Ignore unavailable to you. Want to Upgrade?

To: alanrs who wrote (47)	8/15/2001 9:05:21 AM
From: edamo	Respond to of 1064

alanrs..."put sales" put sales are viable in any type of market as long as you understand the risk, and if you never violate some basic rules, then the risk is no greater then if you made a decision to go long.... 1)always sell a put in a stock that you desire to own 2)always have the capacity to accept the shares if assigned. in essence a full cash back position allows you to sleep at night....even in a falling market the put sale, if you conclude that the market direction may change, is less risky then a buy/write. should you establish a buy/write and your direction call is wrong, then you hold a diminishing asset, which is offset by the call premium. if you sell the put and your direction call is correct you collect the premium, and if wrong, depending on the strike you still are obtaining if assigned the shares at a lower price then the buy/write...so if assigned you can start the buy/write at a lower cost basis...similar to the cash flow generator that roth has in his books... cash in pocket always better then cash out...yes you can lose opportunity, but as i always state you can't spend opportunity.... keep it simple...i tend toward simple positions such as a straight sale...makes life easier... ed a.