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Biotech / Medical : Sepracor-Looks very promising -- Ignore unavailable to you. Want to Upgrade?

To: Jill who wrote (1933)	3/5/1999 9:09:00 AM
From: Biomaven	Respond to of 10280

Jill, Here's a post of mine that explains everything you need to know about options: <G> Message 7768032 If you are also long the stock, that of course changes the risk reward ratio - helps on the upside and hurts on the downside. Being long the stock and short a put is like owning the stock and writing calls against only part of your position. The key thing to understand about options trading is that there are no free lunches - you always give something up for your potential gain. Further, spreads between the bid and ask are murderous for most stocks, and so you are always starting out at a disadvantage. For most people, frequently trading options is like going to Las Vegas - you may get lucky, but chances are your stake will get eaten away by the house edge (the spread). Peter

To: Jill who wrote (1933)	3/5/1999 9:21:00 AM
From: BDR	Respond to of 10280

If you sell puts and the stock moves up your profit is limited to the premium received on the puts and you gain nothing from the movement in the stock price, hence limited upside. Even if the premiums are high you will be able to buy only a small number of the common compared to the potential number of shares you could get if the put is exercised. Stock goes up, small gain on the small long position plus the put premium. Stock goes down, loss on the small long position plus the bigger loss on the stocks you will receive when the put is exercised less the premium. Of course, if you are convinced the stock is going to go up in the long run and you plan to hold, then the short term dips won't matter. But if that is the case, might it not be better to use your buying power to just go long? You may never get the puts exercised but they will tie up buying power and your profits are limited to the small number of shares you do own and the put premiums. You will have to tailor your strategy to your situation.