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Technology Stocks : WDC/Sandisk Corporation -- Ignore unavailable to you. Want to Upgrade?

To: KeepItSimple who wrote (24112)	12/6/2003 9:25:48 PM
From: limtex	Read Replies (1) \| Respond to of 60323

KIS on Ignore being rude to AB is a No No----

To: KeepItSimple who wrote (24112)	12/7/2003 11:28:20 AM
From: Art Bechhoefer	Respond to of 60323

KIS--Don't put words in my mouth, to the effect that the all time bottom had been reached on Friday. Also, before you start calling people insane or dumb, you might be better off studying the use of options as a conservative strategy (i.e., with finite losses or gains). One reason for selling put options several months in advance is to profit from the loss of premium. Every option contract trades at a premium, which is reduced to zero as the expiration date approaches. Another reason for selling put options is that the seller is comfortable with near term earnings prospects for the underlying shares. I refer you to the latest press release from SanDisk, which continues to be very positive for the current quarter. Now you may know about an impending catastrophe in Iraq or somewhere that drops the whole stock market some 20 percent in the next couple of months. Barring that, a put sale on a company with impressive financials and great earnings growth prospects makes a lot of sense. One caution for those who might be interested in this strategy: The money you receive into your account is not available for spending. If the stock drops and the value of the put goes up, the broker marks the account to market. If the investor makes money on the put, that only shows up when the position is closed either at expiration or by buying back the shares earlier. One further thought: Is it safe to buy a stock like SanDisk on margin? If the market drops, and SNDK shares drop even more, an investor on margin is subject to margin calls and often has no choice in what is sold to cover the margin call. That could be a lot more risky than selling put options. Art