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Politics : High Tolerance Plasticity -- Ignore unavailable to you. Want to Upgrade?

To: bull_derrick who wrote (22776)	1/22/2005 10:27:29 AM
From: kodiak_bull	Read Replies (1) \| Respond to of 23153

BD, I don't understand. You bought Jan 06 Leap 80 puts on TOL on 1/4/05 when the stock was, say $67. Those puts should have cost $13.50 or so. With the closing price of 73.55, those puts should have been worth, intrinsic value, about $6.45, or a 50% haircut. The last bid I have for them is $7.1, so I get about a 52% loss. Hedging? I don't know if puts on a sector making new highs will do that, I wouldn't bet on the correlation. So far, even though interest rates have been raised a few times it has had zero correlation with the homeboys; in fact, the charts would say a negative correlation. I will agree that puts are far superior to shorting the shares of high priced stock, both in capital utilization and risk management. Why wouldn't puts on FNM been a more logical place to buy that insurance? Kb