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To: rolatzi who wrote (171397)	6/9/2002 6:23:00 PM
From: marginmike	Read Replies (1) \| Respond to of 436258

could also do bull spread buying calls way out and selling them earlier. Gold stocks technichaly look like crap Bearish engulfings, P&F sell signals etc. They are also at 50DMA. Stocks like nem could easily correct to 24-25. I am inclined to sell and buy later.

To: rolatzi who wrote (171397)	6/9/2002 9:12:05 PM
From: Tommaso	Read Replies (1) \| Respond to of 436258

>>>> your loss is unlimited if the stock goes down. I guess that's the part that does not appeal to me. The call does not make any money either in that situation (obviously!).

To: rolatzi who wrote (171397)	6/9/2002 11:48:18 PM
From: Step1	Read Replies (3) \| Respond to of 436258

Ro, selling a put , your risk is limited to the price of the stock, aint`it? Say you sell the GFI put strike 12.5 for 2.00 and an asteroid made of pure gold hits the earth putting out of business (no pun intended here) all gold mining companies, then GFI goes to zzzero, you are on the hook for buying GFI (1 put contract=100 shares) at 12.5 per contract, but you already got 2.00 for it so your net outlay will be (100 x 12.5) - (100 x 2.00) = 1050 per contract. The stock cannot go lower than zero, so you risk is limited to the strike price less the premium received, still a hefty loss if the stock were to go to zero... On the other hand, selling naked calls is a good way to go to money heaven, like Michael Burke once said, it is like playing Russian roulette with a 100 load barrel with one bullet: you`ll make money most of the time, but the time you hit a bullet , you have your brain all over your shirt... So say you have sold the 17.5 GFI calls for 2.50 and Greenspan `s email is subpoenaed and shows that since 1999 he has pesonally being buying for his own stash the 400 tons the European CBs are selling, and gold on that news goes to 1000 bucks an oz, then GFI could gap up to say 100 usd a share, each contract sold will need to be bought back at 100-17.5 (theoritically, since volatility premium may be higher in that event) less the 2.50 you already received, but you are in a world of hurt as they say... Since theoritically, a share of stock can appreciate in an unlimited fashion (ask Blodget) than naked calls carry an unlimited risk. In practice, the chance of the stock going up vs the stock going down are more or less equal, at least within a certain range, so selling naked puts vs selling naked calls is not riskier (and here I am essentially quoting Mike Burke again) but your broker won`t say so. I hope I am not all wet here, certainly I am posting this also as a way of checking my understanding of the whole thing, if someone wants to correct any mistake, I would appreciate. Stephan Rolatzi >>>>> Short a put limits your profit if the stock goes up or stays pat but your loss is unlimited if the stock goes down. <<<<