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Re: Options - was:Globex2 in home



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At 4:08 PM -0600 7/4/01, Prosper wrote:

>These positions are equal in every way? If the security goes down and you
>have a long call only, you can only lose money period, you aren't going to
>make a dime as I see it. Yes there is no margin cost with just a long
>option. If the margin is a problem don't trader the SP futures period. The
>comissions would be inconsequential. Am I missing something?

Draw out the profit vs. price for a Call and for a Long position plus
a Put. They will both look like this:


                                                     /
                                                    /
                                                   /
                                                  /
 P                                               /
 r                                              /
 o                                             /
 f                                            /
 i                                           /
 t                                          /
                                           /
     _____________________________________/

                                  Price


This is the chart for a call, obviously. But an in-the-money Put
increases in value as the price goes down while the Long position
decreases in value resulting in no net change in your account as the
price goes down - just as does the Call.

Bob Fulks