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

To: Dennis Kern who wrote (112290)	3/25/1999 5:12:00 PM
From: PAL	Respond to of 176387

Why does no one mention the possibility of the stock getting put to you as soon as you write it? If it's in the money, it could be put to you at any moment, right? Wouldn't that screw up the plan? The answer is time premium. For example you sell 1 put contract Jan01/50 at 19 and currently Dell is trading at 38. The buyer of the put pays you 19/share, and if he/she immediately put to you, that buyer will get $ 50/share for a net proceed of 50 - 19 = $ 31. Compare that to selling the stock outright. He/she will get $ 38. Therefore, as long as there is still a time premium in that option, the likelyhood that it is assigned is small. Paul