Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Cheap who wrote (29236)	7/15/1998 6:15:00 PM
From: KBP	Respond to of 97611

Don't take this the wrong way, but if you are asking these kinds of questions, you shouldn't be trading options. kbp

To: Cheap who wrote (29236)	7/15/1998 6:22:00 PM
From: Senator949	Respond to of 97611

<< I know that if compaq went over $40, I will loose quite a bit of money >> You've got it exactly backwards. If you sell a PUT what you sell it for is yours to keep, and in return you guarantee to purchase the buyers underlying stock at (in your example) $40 any time he wants to PUT(sell) it to you up to and including the expiration date. So in other words if you sell a $40 PUT at 7 3/8 and CPQ drops below 32 5/8 and the buyer PUT's it to you, you're gonna lose money. The reason for the different prices is because they will be for different years. The cheap one is obviously a long way out as they are considering the odds of CPQ to be below 40 pretty slim then. There a lot of strings on SI that cover option trading. SEE techstocks.com robin

To: Cheap who wrote (29236)	7/15/1998 6:29:00 PM
From: Matt Meagh	Respond to of 97611

Cheap, I'm not expert on options either, so take this with a big grain of salt, but I thought the buyer of a put bought the right to sell shares (yours) at the strike price. If you sell naked puts, i believe you will have to come up the shares to cover. notice this post is replete with qualifications, i guess this is actually a plea for someone more knowledgeable to set us both straight. If I were you though, I'd hold off on buying or selling options until you get some of these basic concepts clear. That goes for me too! Also, the DExxx options are probably DEC options still listed. I've got a bad feeling I'm probably gonna be looking really stupid after this post. FWIW, Matt

To: Cheap who wrote (29236)	7/15/1998 6:34:00 PM
From: KAD	Respond to of 97611

Cheap: The DEYSH are old DEC options that have been converted. I don't know the specifics but remember that DEC was trading at around a $30 premium to Compaq because of the $30 in cash and almost 1 to 1 on the stock. KAD

To: Cheap who wrote (29236)	7/15/1998 7:31:00 PM
From: Jacques Tootight	Respond to of 97611

Cheap, You're going to hurt yourself bad here my friend. I'm not going to explain why because if you're this confused you're not ready. This is not intended with any disrespect. Please visit: cboe.com for some excellent educational material. There are some excellent books on the subject, I can recommend "Getting Started in Options" Michael C. Thomsett and "Winning in the Options Market" Allan S. Lyons. Please arm yourself with as much knowledge as you can get. There's no hurry to jump in, the market's not going anywhere. There will always be another play. Best of luck, RC

To: Cheap who wrote (29236)	7/15/1998 7:53:00 PM
From: CENTrader	Respond to of 97611

Cheap, It is my opinion that if you are new to options, you shouldn't be even CONSIDERING naked options of any kind. Options will take your head off in very short order, especially if you are uneducated. Read "Options as a Strategic Investment" by Lawrence McMillan....This is "The Bible" of options investing. Then try trading on paper FIRST, until you are comfortable with the way options work..... Then get your feet wet selling Covered Calls. You are a long way off from being able to "deal with" naked options & your broker would probably not approve you for that type of trading yet, anyway. Best Wishes, Bill