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Strategies & Market Trends : Bill Wexler's Profits of DOOM -- Ignore unavailable to you. Want to Upgrade?

To: tom rusnak who wrote (1016)6/11/1998 5:27:00 AM
From: Dale Baker  Read Replies (1) | Respond to of 4634
 
If I may, puts have at least two advantages. The most you can lose is the premium. If ZONA were to go to $70 by August (hehehe) a straight short would be down $45 instead of the $10 you paid.

Second, you can always buy a put. Shares of popular shorts - ZONA, ZITL, AMZN, PNDA - can be impossible to find at some brokers.

Leverage depends on the complex calculation of expiry date and premiums. Black and Scholes won a Nobel prize figuring that one out. Most of us aren't as good, even when we use the Black-Scholes gizmo on E*Trade.

FWIW, in general, the advice is to do what you did and buy in the money puts.



To: tom rusnak who wrote (1016)6/11/1998 1:07:00 PM
From: Bill Wexler  Read Replies (2) | Respond to of 4634
 
Personally, I wouldn't buy puts on a stock like Zonagen. Even though I am certain where the stock will end up in the long term, when you have a management like Zonagen's actively and persistently involved in fraudulent misrepresentation, the stock can get jumpy (very similar to Zitel - check the 2 year chart). I prefer to short the stock, and use the volatility to SELL puts at higher premiums.


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