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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Kathleen capps who wrote (32262)	9/4/1998 6:41:00 PM
From: yard_man	Read Replies (1) \| Respond to of 132070

Rolling down -- buying puts at a lower strike with more time -- after the first set of puts have appreciated several times over allows you to keep profits and risk much less money (just some of your existing profits) while still participating in further drops if they come. I seem to remember MB saying that he rolled down quadruple or betters when it is getting within a month or so of expiration. Good idea to roll down whenever you have a very large 5X - 10X profit, because you lock it in. It is a conservative approach in that you might make more money if the stock keeps on declining had you held the original puts, but that's taking a risk. He probably paid 3 - 5 points for puts that are now trading at 20. If he sells and puts that same amount back in. He still retains a hefty profit and give himself more time for the stock to continue to fall. He sacrifice a little profit for lot's more time -- good exchange, no?

To: Kathleen capps who wrote (32262)	9/5/1998 12:50:00 PM
From: Knighty Tin	Respond to of 132070

Kathleen, Actually, the Jan 110s had run well past where I would usually have sold them. Simply too many puts and too little time and quick gap down and I had to roll larger profits first in a fast market before I'd even noticed that this one was doing fairly well all of a sudden. A great thing, btw, though not especially relaxing. <G> I like to swing for homeruns on a total position in a name, but not on any one option. My style is to roll down when I have a quadruple or better. The theory is, I want to have as little cash on the betting line as possible. Yes, the deep in the moneys do go down point for point with the stock, which is much better than my new out of the money positions will do, but in this case, they represented $24 of my money. That is too much for me to risk in the options market. I like to bet 1s and 2s and take out 4s and 8s. 24s are simply not an amount I am willing to keep on the table. It represents a disproportionate amount of the bets in the 90/10 portfolio. So, in a perfect world, and CCI was almost a perfect world, I buy puts at fairly low prices. 1s and 2s are preferred, though I will step up for higher premiums. Then, as they head down, I roll down and sometimes out at quadruples. I still have a good bet on the downside, but I have taken my winning chips off the table and placed them in my pocket. If the stock goes down really fast as CCI did, I often reduce the total exposure and am now only at a 1/3 position with only 1/6 in place. I will buy the extra sixth when the right strike prices show up. And I will add thirds if the stock rallies. Hope this isn't too confusing. Basically, if you think risk little to win big, you've got the concept in raw form. MB