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To: SecularBull who wrote (112219)	3/25/1999 12:25:00 PM
From: PAL	Read Replies (1) \| Respond to of 176387

To be quite honest, I hate puts. What can I say, I'm a total optimist. So you are bullish on the market since you are an optimist, hence buying a call. Selling puts is for the bullish/optimists as well. You are hoping that the stock goes up beyond the strike price upon expiration to fully keep the premium. Lets us compare buying calls versus selling puts - both are bullish strategies (thanks Don Martini many many posts ago): BUY CALL : cash outflow (could involved margin interest) Sell PUT : cash inflow (could earn interest) BUY CALL : break even at Strike Price PLUS Premium Sell PUT : break even at Strike Price MINUS Premium When market tanks: BUY CALL : bye bye premium: cash balance reduced, might get margin call. Sell PUT : roll it to further month, by covering original option using cash proceeds from the new put option (can also be of a different stock). If the market tanks, original put becomes expensive, but so is the new put you are rolling into. Take tax deduction, cash balance remains intact. Negatives of Selling puts: BUY CALL : unlimited appreciation so you hold on the call until expiry or stock stops appreciating Sell PUT : if stock price zooms like a rocket, profit is limited to the premium received, but if premium is close to worthless, cover it and write new put. The above are some of the pros and cons. In either case there are risks involved. As I understand these are the levels for option for my broker: Level 1: write covered calls and buy puts on stock you own Level 2: buy calls and puts Level 3: do a spread Level 4: sell naked puts Level 5: sell naked calls Paul