To: arthur pritchard who wrote (96716 ) 2/10/1999 10:11:00 AM From: edamo Respond to
i only write a put against cash on an underlying issue such as dell, that if put to me i wouldn't mind owning and have the capacity to accept....rule you never want to break...always have the capacity to buy the underlying....if you just want to raise cash sell puts that are deep such as a dell may 75(dlqqo), which someone will give you about a 5.50 premium...your risk is dell trading below 75 in may...if you want to generate more cash you may consider selling dell jan01 100 put(zdemt) and get a 35 premium....one contract nets you 3500....if you do this you must ask yourself the following...has dell reached it's all time high, will it appreciate by at least 10% in two years, if it doesn't would i be willing to accept the stock with a cost basis of 65...or if i'm wrong why not just roll forward in 01 to an o3 contract....the odds of someone putting it to you prior to expiration are nil, because your contract can no longer be trade,options buyers, unless they use leaps for stock replacement are essentially gamblers...time is on your side when you write, and you can always get a time extension...the buyer can't
