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

To: taxman who wrote (120458)	4/24/1999 10:38:00 PM
From: edamo	Respond to of 176387

taxman...hope i can clarify... capacity...always necessary, this reduces risk...if put prior to expiration you can graciously accept the assignment..your safety net...have yet to have an assignment in spite of being upside down at times....normally buy the put back be it profitable or not buy selling replacement positions...unprofitable buy back creates short term tax loss only..no real loss of capital..in fact increases cash as replacement gives higher premium, with no additional exposure. rolling a put forward to a further expiration is not cumulative, in fact it is subtractive...same strike, added premium equates to reduction in cost basis. desire to own...put selling is similar to go long...wouldn't go long in an issue that i believe is not trending up..same holds true for sale of put...stock tanks you can reset position as stated above..leaps give 30+ months...if stock fundamental hasn't changed then ride it out. if stock tanks..reset with more favorable stock...just did it with compaq..closed the position..earlier post of mine gives complete details and strategy.. high implied volatility...put buyers are wrong on most days..2/17 when dell dropped (post split shown) from 50-42.5 0160 premium was 26...stock dropped to 35..and premium didn't expand beyond 26...if you catch these rare moments..it's a gift from the options trader..i still hold the position..but could have closed with a four point gain the next day with dell common lower..purely on iv normalizing..hold it long enough and time erodes the premium...why would a owner of a stock pay a very high insurance premium..better to blow out..but it's not the insurance buyer but the trader who is taking the bet...odds always long term with the underwriter...would you give me 26 to sell dell to me at 60 in 01...my cost if put would be 34...gotta believe dell is not going to collapse.. interest free loan money...as in if i have capacity but no cash, i have two choices to buy more stock...borrow margin or sell puts..margin entails interest, put sale is interest free..you can draw against your capacity by put sale...how the market sets the price that i get is of no interest to me..i look at dollars, and simple math as in subtraction... the sale of a put in reality and practice is the only derivitive that has an infinite time...buy a call, you are finite..sell a put and you can roll forward...it's more conservative than call buying for it is cash in versus cash out.......and cash is king... my dell put sales since 2/17 have allowed me to add 8000 shares of dell to my portfolio...without borrowing...and if i'm wrong..i know the repairs that have to be made...