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Technology Stocks : Ascend Communications (ASND) -- Ignore unavailable to you. Want to Upgrade?

To: Gary Korn who wrote (29220)	1/3/1998 12:52:00 AM
From: George Coyne	Read Replies (1) \| Respond to of 61433

Gary, I agree with you. If you are that uncertain about the wisdom of your investment you should simply sell. G. W. Coyne

To: Gary Korn who wrote (29220)	1/3/1998 2:06:00 AM
From: James A. Shankland	Read Replies (1) \| Respond to of 61433

Gary, that's exactly the problem with buying protective puts: they expire quickly. Or if they don't, they're too expensive to be worth it. Look at ASND: you could buy a 25 put for 1 1/4 (ca. 5% of the value of your stock), but it expires in two weeks! That is not cheap insurance. For ca. $4, you can buy just under 6 months' worth of insurance (June 25 puts); but that means ASND is going to have to go up at an annual rate of about 34% just to cover the cost of the insurance you're buying. Hey, maybe it will; but it sets the bar pretty high, and chews up lots of potential profit. It's tempting to look back and say, "If I'd bought protective puts back then, I'd have saved a bundle;" but if you really think the stock is going to go down that much, you're better off just selling it outright.

To: Gary Korn who wrote (29220)	1/3/1998 10:56:00 AM
From: Jeff Jordan	Respond to of 61433

You may be right, however, I'm not good at chewing up assets with downside insurance. I've found that puts fail if (1) the stock rises or (2) the stock idles. I think they only help if (3) the stock drops fairly sharply. This has happened to me when I've done protective puts. They best way to protect yourself is protective stop loss orders! As the stock moves up inch your stops up to protect profits. Jeff

To: Gary Korn who wrote (29220)	1/4/1998 2:51:00 PM
From: Glenn D. Rudolph	Respond to of 61433

You may be right, however, I'm not good at chewing up assets with downside insurance. I've found that puts fail if (1) the stock rises or (2) the stock idles. I think they only help if (3) the stock drops fairly sharply. This has happened to me when I've done protective puts. That is, the stock idled and slowly, too slowly, drifted lower until the puts expired worthless, costing me money. I guess I would have been happy (or at least protected) had the stock really tanked. Gary, I never buy protective puts. I have not bought them for 15 years or so. The stock action in 1997 was the only year in which I wish I had bought them. My normal approach is to write naked puts as I did in 1997. This has worked for what seems like forever. 1997 was a very bad year for me but I believe if I took all the premium I received by writing naked puts and not buying protective puts over the years, I am way ahead. Glenn