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

To: jas cooper who wrote (2834)	10/15/1998 10:37:00 AM
From: Gary Korn	Read Replies (1) \| Respond to of 4135

James, Writing naked puts can be an excellent, conservatively bullish move. With XYLN at 13ish now, you can sell the Nov. 12 1/2 puts for about 1 3/4. Worst case, that is like buying the stock at 10 3/4 (i.e., 12 1/2 strike price at which it will be assigned to you if the stock price falls below the strike minus the 1 3/4 commission that you took in). That is not bad: You can effectively buy XYLN today for 10 3/4, even though it is now at 13. Heck, I tried to buy this morning at 11, but the MMs took that ort off of the table before the market opened. I've been writing conservative puts (i.e., those that are not out of the money, such as, for example, the XYLN Nov. 20s) for a year now, and if you are careful (it can cause you to get way too overexposed on the bull side), it is a decent source of income. Reasonings behind selecting a particular strike price: I like to pick a strike that is below the current strike price (conservative). I don't like to start out with a potential assignment. Month to pick: I like to pick the closest month. Better to multiply the premium you take in by 12 (12 months) than to do, say, 3 4-month picks. Best, Gary Korn

To: jas cooper who wrote (2834)	10/15/1998 11:20:00 AM
From: drdan	Read Replies (1) \| Respond to of 4135

james, if you want to buy puts, do so at a strike price at or above the stock's present price. That way, once the stock moves down, the option will gain in value considerably as the stock drops. If you wanted to be gutsy, you could buy puts with a strike price well above the stock price so that for each dollar drop in stock price the option would gain a dollar.....keep in mind, though,that you will get killed if the stock goes the other way. A less risky approach would be to buy puts somewhat below the stock's present price and then let the stock drift down into the money. You make less, but you won't get hammered as badly if the stock goes the other way. Hope this helps.

To: jas cooper who wrote (2834)	10/15/1998 1:16:00 PM
From: jach	Respond to of 4135

quick logic on puts selling (short position) 1. identify great stocks that have been beaten down for some reason. Gives an example one here which is disney. 2. Sell the number of contracts that is equivalent to the shares that one is willing to buy if the price happens to drop below strike. Example for Disney one can sell Nov 25 put for 1.3$. If disney close below 25 one should be willing and happy to get in at 25 (effective price is 25-1.3$)= 23.7$ 3. Wait until Nov 3rd Friday, if disney at or above 25 pocket the option premium (1.3$x100xnumber of contracts). 4. If anytime during if disnet happens to go up considerably then one can close the position and take some profit also. Note: Disney is used here as an example tradepbs.com