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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Larry P. who wrote (47911)2/18/1999 11:03:00 PM
From: Eggolas Moria  Respond to of 132070
 
Reminds me of a foray into put buying in August 1987. On the 24th and 25th, I owned almost the entire open interest in the S&P 500 Index puts, June 335/340 (don't quote me on the strikes, it's been too long). For 11 months of protection, the price was about 5%.

When the crash came, the S&P 500 puts were over 100 and priced about 15 or more points under their fair value (the OEX puts were fine by contrast). At that time, I learned the importance of European expiration vs. American expiration and something esoteric called "negative gamma" which I interpreted as someone losing their shirt (the guy who sold me the puts).



To: Larry P. who wrote (47911)2/19/1999 10:32:00 AM
From: Knighty Tin  Respond to of 132070
 
Larry, I have used them, but very rarely. That's because I consider myself more of a stock and sector picker than a market timer. Also, you don't get homeruns on the indices. The drops last year in Ciena and Citicorp just wouldn't have been that steep in the S&P.

MB


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