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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study! -- Ignore unavailable to you. Want to Upgrade?

To: Jonathan Thomas who wrote (10796)	5/14/1999 1:41:00 PM
From: Dan Duchardt	Respond to of 14162

I don't want to protect every possible scenario only to make $1000 on this deal, not to mention give all my money to the broker. I'm confident this stock won't drop to 10, but the puts are nice to have. I DO PLAN on making a profit on them however, they are not for protection alone. I slowly came to this realization as I've been following tuck's play on EDFY, and tracking my own paper trade on same. I was resisting the idea of buying puts, thinking I didn't want to "waste" (no stone throwing, please) any profits buying puts on this rocket. This morning I "bought" the June10s at 3/4, thinking the day's sell off might pull EDFY down with it, and I might scalp a fraction of a point. This puts the whole notion of "protective puts" in a new light for me. I also realized by giving attention to delta (listed at only 2% when I bought the puts, although I question that number) that the puts would decrease in value rather slowly if EDFY continues to rise, while both the delta and the price will increase if EDFY falls. It was nice to come here after that exercise and find this post spelling it out so clearly. I'm wondering if it was all in Ryan's earlier posts and I just absorbed it without realizing it. Anyway, thank's Ryan, for a very clear statement of your thinking on this! Dan