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Technology Stocks : Internet Analysis - Discussion -- Ignore unavailable to you. Want to Upgrade?

To: jbe who wrote (341)	4/21/1999 4:36:00 PM
From: Chuzzlewit	Read Replies (2) \| Respond to of 419

Joan, I would be more than willing to hold your hand. Here is one example. Let's say you own 100 shares of XYZ and the current price is $50, which you think is much too high. But greed gets the better of you and you want to squeeze more out of the stock without risk of the price going down. So you buy an insurance policy against the price of the stock dropping. Like any insurance policy it has a premium, and it lasts for a specific period of time. So let's say that you decide you want a $5 deductible on your stock (that is, you would not be upset if you suffered a $5 decrease after your absolutely unconscionable gain up from $10 in two weeks --you should be so lucky!). So you buy a $45 put, and the premium is what you pay for it. The put gives you the right to sell ("put") the stock at $45 at any time before it expires. Or instead of selling the stock, you might prefer to sell the put to somebody else. A put is like a short sale in that it appreciates as the price of the stock drops, but unlike a short sale your risk is limited to the premium you paid, and the put is of limited life. There are lots of good books out there on how to do this. If you are interested I could give you some ideas. I own lots of companies with long term appreciation. I've held IBM, and T (along with all of its spin-offs) since the 1960s; I've held TYC since the mid 80's. The annualized appreciation of the basket of these stocks has exceeded 20% per annum. In the tech arena I do considerably better, but you need to be watchful. So far this year has been pretty mediocre (BMCS, NETA and PSFT having done much damage) -- up only about 10%. But that's the way it goes. TTFN, CTC