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To: Zed who wrote (4992)	2/26/1999 4:13:00 PM
From: SJS	Respond to of 19700

If you sell the puts for a premium, then you may be right or not. If you sell 100 strike puts for 5, for example, your breakeven is 95. If the stock goes to 90, you could have purchased it for less, sure. If it goes to 98, and then back up to 125, you own it at 95, so you have purchased it cheaper than the lowest recent market price.

To: Zed who wrote (4992)	2/26/1999 4:15:00 PM
From: Mark Peterson CPA	Read Replies (2) \| Respond to of 19700

Zed, the success in the strategy of selling a naked rests in the hope that the upward movement of the stock will bail you out and that you will never get "put" the stock. Naked put sellers will tell you that if the stock goes down, not a problem, you just roll to another month by buying back your put at a higher price and then selling a put at a future expiration, effectively rolling the position. All that does is buy time: to hope, wish, and pray that the stock will go up and bail you out. Although there are some individuals on this and other threads who appear to be comfortable with the strategy and are clearly knowledgable about it, trying to buy back your put in a free-fall market is like trying to catch a falling knife. I don't mean to say that this is not an appropriate strategy for those who are versed in it. Just that when used alone, there is a commensurate risk attached to it that this 10 year bull market has, for the most part, kept under wraps. But if you're going to do it, might as well practice. Have someone stand on your kitchen counter and drop them. You try to catch them before they hit the floor. Get the idea about risk? Best regards and good investing, Mark A. Peterson

To: Zed who wrote (4992)	2/26/1999 4:18:00 PM
From: Eric	Read Replies (1) \| Respond to of 19700

basically the move is to bet that the stock will go higher and what is in the money puts will soon be out of money ... in the money puts will get you more premiums, if you believe the stock will go up it may not be a risky bet. Even if the stock does go down, you will still be ahead as long as your strike price - option price > market price ...