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To: PAL who wrote (83822)	12/5/1998 9:05:00 PM
From: Don Martini	Read Replies (1) \| Respond to of 176387

Hi, Paul! Your question is When to roll a short option to keep it from being exercised? Thank you very much for the kind words! Here are some ideas: 1. After a stock goes up it goes down, 2. And after a stock goes down it goes up! 3. Your risk goes up with the other fellow's profit. 4. Puts are exercised sooner than calls if the profit is large. 5. Generally calls aren't exercised til close to X as the buyer must pay for the stock. Assume stock fundamentals aren't changing Assume market is unaffected by drastic events It's 2 weeks till expiration 65 Puts or Calls have been shorted for $5 I'm $1-$2 under water There's no great motivation for the buyer to close. Waiting a few days can double his profits, if he thinks the market is OK he'll probably let it ride. If I close early I may take a loss that can turn into a profit. Imagine he's ahead $5, got a double. He may well take the money! When I don't someone always tells the market which deviously figures out a way to evaporate my profits. It's the old You-don't-get-rich-today law. Imagine I'm the put buyer: paid $5, have a double; $10. If the market's falling I'll wait. Otherwise I'll close early. Suppose I have a triple: Color me gone, I'll take the money and buy more options further out, probably switch to calls expecting the stock to regain it's old price. In personal practice I never buy puts, always sell them, buy calls sometimes, sell straddles with the call side covered if the stock is cycling in a tight range. Sig is the Caliph of Calls, see his post #81771 Paul, I hope this is of some help. Happy investing! Don