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

To: edamo who wrote (111989)	3/24/1999 10:01:00 PM
From: Sig	Read Replies (1) \| Respond to of 176387

Re : Options In other words..... "That which we persist in doing becomes easier for us to do; not that the nature of the thing itself is changed, but that our power to do is increased." -- Ralph Waldo Edamo 3-24-99

To: edamo who wrote (111989)	3/24/1999 10:04:00 PM
From: PAL	Read Replies (1) \| Respond to of 176387

edamo: although the analysis show of six half a dozen between selling Jan01/85 puts and outright buy (up to Dell hitting 85 come Jan01), and selling put is falling behind if Dell trades higher than 85 come expiration day, i concur that selling put gives a lot of flexibilities: rolling to higher price if the premium drops. as i posted before, i only have to roll them once, i.e mar50 puts into may50 puts. sometimes i consider it as license to steal. now i am tired. best regards paul

To: edamo who wrote (111989)	3/24/1999 11:49:00 PM
From: Mr. Aloha	Read Replies (2) \| Respond to of 176387

Great discussion on put selling. As you mention, the key is to "buy" quality. Also, don't get overleveraged. The risks with this strategy are that the underlying goes down and never comes back up, which bears will contest is the case for Dell. If indeed the stock goes down significantly over time, you won't have the same strike prices available to roll out and can lose your shirt. The strategy has worked incredibly well in the large-cap tech stocks in recent years, but the question is will these stocks continue to go up, or at least not go down? Risk is same as/less than being long that number of shares, but some people will go overboard and take advantage of the lower margin requirement and "free" leverage. In a bear market, or even in a significant correction, someone overextended may not be able to keep the same level of overextension and be forced to close out positions at low prices. They may also be too scared to stick with the strategy, exiting at the bottom (have this same risk when going long on margin). The temptation and ability to be overextended is greater with selling puts because you don't see the cash going out and your margin goes further, making it easier to control more shares. In summary, this is a great strategy in a bull market if you do it right, stay disciplined, and maybe use protective puts (creating bull put spreads) to protect against corrections. Another way selling a put can be "covered" other than for shorts is when you're long another put. For premium purposes, you may want to be long a LEAP put for downside protection and sell shorter-term puts for income. Or, you may purchase an Out-of-the-money put paired along with the in-the-money put you sell. Bottm line is, while this can be a great strategy in the right circumstances, it definitely isn't risk free... Mr. Aloha p.s. -- Since the gains from selling puts are always taxed as short-term capital gains, this can be a more useful strategy in an IRA, if you have a broker who lets you do that. In an IRA, you need to be covered with cash (yet another version of "covered put"), so you can't get overextended.