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Strategies & Market Trends : Options for Newbies -(Help Me Obi-Wan-Kenobe) -- Ignore unavailable to you. Want to Upgrade?

To: Esteban who wrote (645)	1/31/1998 5:12:00 PM
From: WTT2	Respond to of 2241

Newbie here<<< have not traded any options to date. If someone could help me w/ this. I am interested in purchasing a stock which is currently trading under 10$ I believe the stock could double in the next 3months. The stock is <<DIGE>> I use DLJ direct I did an option quote and it is not showing any bid or ask offers. does this simply mean that there is know one interested in selling a call? I know everyone has different stratagies but using this stock what are my OPTIONS. Thank You, Bill

To: Esteban who wrote (645)	2/1/1998 2:13:00 AM
From: ----------	Read Replies (1) \| Respond to of 2241

Esteban: Yes, your question is clear. Let's hope my answer is, too. <g> If I sell a TBR 115 put, I'm on the hook, potentially, for $11,500.00 As long as I have at least $11,500.00 in fully paid securities in my account, I am covered. (Reg T says I can borrow 50% of a security, thus the $11.5k in fully paid securities is adequate collateral for selling the put.) IF I had no securities in the account, then I would be expected to deposit $5,750.00 in the account. This money, (plus the premium received) would sit in an "escrow" or "collateral" account to protect the firm, should I get the stock assigned. I usually don't write long term puts for a couple of reasons.... first, the percentage rate of return on the one's I've looked at is not as favorable as shorter ones. Second, it ties up money/equity for a long time. When I am put a stock, I usually write a call on it. Many may disagree. But to me this is basically the same thing as using a "buy limit" and a "GTC sell limit" order. With one huge exception... I get paid, limit orders don't. <g> Doug