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Strategies & Market Trends : P&S and STO Death Blow's -- Ignore unavailable to you. Want to Upgrade?

To: TREND1 who wrote (17245)	11/26/2002 3:27:21 PM
From: mishedlo	Read Replies (1) \| Respond to of 30712

(6)Buying puts rather then shorting is much more risky here due to bid and ask spreads.IMHO. Three month out or longer ITM puts would have roughly same risk reward. Bid ask spread would be .10 and for every 1000 shares one would short that would just be an extra $100. So if one was to buy 20 puts (yes one does have to overcome that first .10 * 2, but after that roughly the same. If one was to stay in until todays high was taken out, almost a full QQQ point move, I do not see a lot of difference. Because of the time premium the loss would probably be lower than a straight short, as would the gain. Depending upoin how ITM the pust were, it might be a .80 or .70 mvoe EITHER way as opposed to precicely 1.0 with straight short. If one was buying stort term OTM puts, yes you are correct. Such a move against one would not be pretty %wise (but $wise it would still likley be lower, IF the move against happened right away). Thus properly played by your scenario (assuming that if one was to short 1000 QQQ vs buy 10 puts, the risks (but also the rewards) would likely be smaller on the PUTS. M