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Strategies & Market Trends : Tech Stock Options -- Ignore unavailable to you. Want to Upgrade?

To: Jorge who wrote (53239)	9/18/1998 5:36:00 PM
From: Linda Kaplan	Respond to of 58727

George, Good strategies. I wish I'd followed them more often myself! Thanks for posting them. Linda

To: Jorge who wrote (53239)	9/19/1998 12:48:00 AM
From: MonsieurGonzo	Read Replies (1) \| Respond to of 58727

Jorge; RE:" Shorting PUTs to Acquire Equity Positions " ...thank you for nice posting on interesting topic. There is a lady here on SI named simply, "Judy" who is an expert in the area of selling PUTs to acquire equity positions. Message 5779182 Here is a reference to one of her posts; she is often-bookmarked by folks. Because she is so experienced with this trading technique, I'm sure that she could help anyone wishing to explore the tactic further. -Steve

To: Jorge who wrote (53239)	9/19/1998 6:55:00 AM
From: SJS	Read Replies (1) \| Respond to of 58727

Jorge, I have done this every which way with a few stock, but like doing this with EMC Corp, a fundamentally very very strong stock with a good upward bias and risk/reward ratio. Don't look at Friday's event, that's an aberation, due to management news. It has worked very very well. Why? It is a fundamentally strong stock that fits your profile for selling puts. What's harder to get right is to buy other "protective" puts that are at the next lower strike (you use up some of your put income from doing this, reducing your return), or to buy one at a higher strike (you use up all your put income plus additional capital). I am not advocating sitting naked with no downside protection, so I watch the stock carefully to understand it's trading pattern, and then hedge half the position with protection, but not all at the same time. I may "leg" into this, in part, after time erodes the premium, since time can also work in your favor (or against you). If you choose NOT to hedge the short with a lower strike protective put when you open the original put sell, the stock could drop and the puts you sold go against you. I sometimes do 1/2 (or 1/4 or the total put contracts sold) of the hedge immediately at the lower strike for IMMEDIATE protection (a bad earnings report, or warning will KILL you), and see if I need the other half. A couple of other points: 1) It is helpful to graph each opportunity to see what it looks like. Go see DOUG: webbindustries.com 2) Some folks buy the "special" strikes (32.5, 27.5, etc) option strikes as protection for positions sold at strikes 2.5 points higher. You use alot of your net gain to do this. If you can stand to do it, buy the next lower one, ie 5 point below the current strike you sell. Remember, this hedge is for a catastrophy or meltdown, not a fluctuation. 3) Watch for expirations timeframes between months that are 5 weeks long, vs 4. You get more premium, but it takes longer to erode. All disclaimers, your mileage may vary......... Best of luck. Steve