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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: freeus who wrote (65722)	9/16/1998 11:13:00 AM
From: Don Martini	Read Replies (1) \| Respond to of 176387

Good Morning, Freeus! Please go to CBOE and print out an option chart for Dell. The calls are on the left side, puts on the right. Oct 4.5 put at $5 is not on the chart, you have miscommunication somewhere. Consider Oct 60 puts which traded today for 4 3/8. Bid is 4 1/8 Ask 4 1/2. If you sell them at 4 1/2 you receive $450 per contract/100 shares. The buyer then has the right to put the stock to you at $60/share, if he does your actual cost is $60-4.50 = $55.50 per share, a discount from today's price. Puts give the buyer the right to put the stock to you, not take it from you. If the stock goes up the puts are worthless as the buyer can sell it on the open market for more than the strike price [$60 in this example]. In that case you keep all the money. If Dell is less than $60 when the puts expire [let's say $59] the stock will be assigned to your account at $60/share. But you got $4.50 for selling the put, so you're $3.50 ahead. Your obligation as seller is to buy the stock at the strike price. This option is open to the buyer up to the day of expiration. He can put the stock to you whenever he chooses. I like Dell puts because the stock is on an elevator so usually they expire worthless. On the other hand, if Dell dips I can buy back the puts about to be put to me and sell ones farther out for more money: I'll pay you later if you'll pay me more now for paying you later. I hope this helps. Get a booklet on options from your broker, he has to give you one before you can trade options. Happy investing, Freeus! Don