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Strategies & Market Trends : Jimmy's Option Pit and Undervalued Stocks -- Ignore unavailable to you. Want to Upgrade?

To: Carolyn S. who wrote (3)	3/17/1999 9:34:00 PM
From: jimmy	Respond to of 47

Hi Carolyn, In order to sell calls, you first have to own the stock outright. Unless your account allows you to sell naked calls, which I consider highly risky in the internet arena. By owning stocks, you must use your capital to buy the stocks or buy margin. The reason I don't like selling calls is that I limit my upside and tie up my money. Also, I will not get interest on that money. Okay, let get an example, well use SDTI (Security Dynamics) I buy 1000 shares at 16.75= $16,750. I sell 10 calls March 17.5 for $.50 = $500 income premium for 1 week option is 3% call away at 17.5 total gain 7.4% I can sell 10 puts March 15 for $.50 = $500 income Thats all I get for premium, but I don't have to pay $16,750, but I will receive interest on this amount. If SDTI goes down to say $15.5. I will have $500. But for the calls you gain $500 bucks on the call, but you lost $1,250 from owning SDTI. Your net lost is $750, but by selling the put you are protected from a little down side. hope this helps, jimmy

To: Carolyn S. who wrote (3)	3/17/1999 9:39:00 PM
From: jimmy	Read Replies (1) \| Respond to of 47

Carolyn, To really answer your question, I was answering the wrong thing. I don't buy calls is that I am in the market for Premium. I am like a insurance company collecting payments. I don't like paying for "insurance", so I don't buy calls. Sometimes I do, if the situation is right. jimmy

To: Carolyn S. who wrote (3)	6/17/1999 6:30:00 PM
From: Gerry Schechter	Respond to of 47

Carolyn when you sell puts you receive a premium-when you buy calls, you pay a premium. Both vehicles give you the risk of being long, however with the short put, your cost is reduced and your upside is limited. With the call, your cost is increased, but you upside is unlimited. Shorting puts is a great way to receive a steady income of 6-12% monthly-if the stock does a nose dive, you will lose, but less than if you had just been long the stock. Always identify what your upsides and down sides are before you take a position.