Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: edamo who wrote (104207)	2/23/1999 12:51:00 PM
From: PAL	Read Replies (1) \| Respond to of 176387

Edamo: another person who is very knowledgable on this thread about selling puts is Don Martini. I have learned a lot from him. For example, the beauty of selling puts is that you can remedy a deficiency by rolling further down the line. Let me give an example to those who are contemplating of selling puts: 1. Never violate the basic rules specified by Edamo 2. How to correct deficiency: Case study: You sold 10Mar100 puts at 9 5/8 a few weeks ago (DLQOT). Dell went south, now DLQOT is selling at 16. If Dell stays the same (current price 87) until expiry date (March 20), you either buy Dell at 100 (your cost is 100 minus 9 5/8) or buy back at 13+, and lose about 3 1/2 per share. You can postpone the day of reckoning: buy back DLQOT at 16, and sell DLQQT (May 100) at 19. In essence, you keep the original 9 5/8 premium plus you get another $ 3/share by extending the put from March to May. What happen then in May? That depends how Dell is performing. If still below 100, you can roll it again to August, and so forth. We do expect that Dell will hit 100 again this year don't we? Good Luck, and thanks to Don Martini and Edamo. PAL.