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To: mishedlo who wrote (169167)5/30/2002 9:00:02 PM
From: yard_man  Respond to of 436258
 
you're analyazing it wrong, 1.70+12.50-13.92 = only .30 premie vs. 1.78 or so with the October 12.5. June 12.50 ain't worth doing at all. It is not just 1.30 less -- you have to take into account the cost of the position, man.

June potential gain if shares are called is .30/(13.92-1.70)

~2.5% (5*2.5 = 12.5 < 16.5)

October's is 1.78/(13.92 - 3.10)

~16.5%

That's a huge difference.

There is also huge difference in downside protection:

Look at the total costs of the positions:

June == 12.22

Octo == 10.82

Selling the put is almost always a better deal, but not all brokerage accounts allow this