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

To: Jacob Snyder who wrote (21952)	7/19/1998 9:24:00 AM
From: MrGreenJeans	Respond to of 70976

Puts vs. Shorting <<can you give me your rationale for choosing those puts (in-the-money 3 months out), as opposed to shorting (or January 99 puts, or out-of-the-money puts). I just started shorting this year (I'm 3 for 4, so far) but I've never bought puts. >> Simply put (no pun intended), puts have a better risk / reward ratio than does shorting. If you use a put and the position is not profitable you know in advance what your monetary loss will be...the price of the premium paid. When you go short your risk is open ended. Most major investment firms make it a policy never to go short; they feel the risk is too great.

To: Jacob Snyder who wrote (21952)	7/22/1998 2:12:00 PM
From: akidron	Read Replies (1) \| Respond to of 70976

jacob..... I'm sorry to have taken so long to respond 2 your post but I've been away.... and am going again..... I like options because I can apply very small amounts of money and get real leverage if the stock moves..... one thing to remember is that if the stock moves quickly you keep much of the premium.... the shrinking premium only becomes a factor towards the end.... I am 8 for 11 on AMAT options and some of the ups have been in the x5 range.... the reason I liked puts on friday is that u have two events.... one is that this industry hit is worse than 96' and there's no-one gonna come in and do what the taiwainese did last time.... two the market as a whole has been playing sucker with earning for too long... how long is it before everybody realizes that the earnings reports looked good only because expectations are so reduced.... I still say AMAT loses money in the 4th Q or takes the mother of all charges... perhaps both