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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: BOGEY MAN who wrote (11250)	11/16/1997 11:18:00 PM
From: William	Respond to of 70976

BM - I don't see why you say the loss is unlimited. (In fact it can't be.) If I write (sell) a put, say the Jan 00 $60, I receive the premium of say $30 (bid asked is 29 31). At any time I may be exercised, and I pay $60 for the stock, minus my $30 premium, I just bought the stock for $30. Stock goes to zero and stays there, I'm out $3,000. No different then if I buy the stock at $33 and it goes to zero. If the stock goes to $50 and is put to me, I pay $60 for a $50 stock, but I still have the premium so I own a $50 stock that cost me $30. I sell or keep as I wish. If the stock goes above $60 the put expires and no-one sells me a say $70 stock for $60, so I pocket the 3 grand. I understand that I miss any move over the strike price, but that is all part of the options game. Selling puts on a stock you would like to buy can be a nice way to get it at less than current market. If nothing else you get the time premium. William