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

To: William L. Oppenheim who wrote (13336)	12/15/1997 9:58:00 PM
From: Lee Penick	Read Replies (1) \| Respond to of 70976

William, Off topic... Re - "You must be one of the 10% that makes money from the other 90%. I confess that I don't really understand roll overs. Perhaps you can explain them to me. It seems to be something you do when your initial idea didn't work out." Rolling forward: I recently sold naked puts on AMAT, DEC 35s. Looked like a good thing at the time, then the options gods turned against me and the next thing you know, AMAT is at 25! So of course the buyer of those Puts could Put me and I would have to pay 35 per share when the market price is 25ish. That would hurt. So instead of being Put, as I do not want the stock, I roll forward. In this case, I buy back the Dec 35 puts I originally sold, and at the same time sell Jan 35 Puts. Now, because the January Puts have more time value in them, they sell for slightly more. So I get a slight credit per share. I am currently trying to do this and get 3/4 credit per share. It didn't quite make it today. So I try again tomorrow. So rolling forward lets my collect a little more money each month, and I patiently wait for the price to go back up, just like a long holder of the stock. Nice thing, it costs me no actual money at this point. Uses collateral in my margin account, but not actual money or interest. I believe in AMAT so I'm not worried, the worst part is: 1) with the price so far out of the money, the time value is very small for the Jan Puts. So the credits are small. 2) The Put which now cost about $7 to buy back, suck down a lot of margin ability, even though it doesn't cost me money or interest. Hope this helps, If not, ask more. good luck, Lee