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<DIV>RT's,</DIV>
<DIV> </DIV>
<DIV>Thanks to all who responded for the input on the strategy of selling naked
puts on stocks that are about to split - if my friend was inclined to re-visit
reality and assess the feedback I got, he'd find this result:</DIV>
<DIV> </DIV>
<DIV>1 vote for the idea -8 votes against</DIV>
<DIV> </DIV>
<DIV>I don't wish to sound as if I'm belittling anyone here, but the only vote
in the affirmative seems to be from a graduate of the Wade Cook system - the
remainder were from traders with (I'm roughly estimating here) 100 years
combined experience (probably more) who don't seem to share the opinion of Mr.
Cook.</DIV>
<DIV> </DIV>
<DIV>To those who feel that the idea of "rolling out" to the next month's
options will not cost them money at some point, I don't know what to say except
that rolling out shouldn't be necessary unless your position is already a loser.
The assumption that the stock is bound to turn around and make those puts
worthless before much damage is done to your account is too much of an
assumption for me to bet on to roll out to anything except another trade. This
"win-win" scenario that Wade Cook describes sounds wonderful, but those who do
this win-winning are likely to be the brokers and exchanges, and eventually the
buyers of the puts you roll into.</DIV>
<DIV>The point has been raised that selling these puts is a sound strategy if
one sticks to the blue chips, but my friend (who attended Mr. Cook's seminar)
seems not to have come away with this in mind. He's busy selling puts in NASDAQ
stock issues I never knew existed, and he's been selling the puts just in
time for these stocks to undergo the inevitable correction from their historic
highs - margin call, margin call, margin call, whew!!! Dodged the last bullet!!!
"I never lose!", says he.</DIV>
<DIV> </DIV>
<DIV>Once he sells those puts on the one stock that drops like a rock as soon as
he sells, and doesn't turn around, all the rolling out in the world won't help
him - he won't have enough left in his account to cover any further margin
calls and then, when he can least afford it, the stock will take the final
plunge in its correction and "put" an end to the game once and for all. Of
course, the next day it will reverse, convincing him that all he has to do next
time is hock everything and hang on just one more day... I hope it doesn't
happen, I wish the best for those doing it, but it seems that usually - when a
person is overextended - the hammer drops and they find out what trading's all
about from another perspective.</DIV>
<DIV> </DIV>
<DIV>Just as a follow-up on my buddy's situation, he now informs me that he's
found someone to bankroll an account to the tune of $100,000 and they want him
to daytrade it! He's never traded <U>anything in his life</U>, unless it was
baseball cards!!! His benefactor has also agreed to pay him $500/WK to do the
daytrading AND has agreed to split the profits 50/50!!!!????!!!!! "It
couldn't have come at a better time", he informed me! Now he can drop his
insurance business! As you read this last paragraph, did your jaw hit the floor
as mine did when I first heard it??? I almost swallowed my tongue!!! Does anyone
have anything positive to say about ANY of this? What the hell is going on here?
I can't believe someone would dump that kind of money in his lap and say, "Here
- daytrade it! Oh, you've never traded? Don't worry about it, how hard could it
be?" Anything this outlandish has got to be a setup - but how??? Could they yank
their money or refuse to meet the margin calls and leave my friend hanging with
more debt than he could ever hope to pay by holding him legally responsible
for the losses that will undoubtedly occur? How many different ways can this
turn out badly??</DIV>
<DIV>How far should I go now with my concern for him and his wife and family? Is
this as insane as I think it is? I think I already know the answer to that last
question...</DIV>
<DIV> </DIV>
<DIV>Dennis C.</DIV>
<DIV>dlc@xxxxxxxxx</DIV></BODY></HTML>
</x-html>From ???@??? Tue May 25 18:07:27 1999
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Date: Sun, 23 May 99 17:29:21 +0300
Reply-To: brock@xxxxxxxxxxxx
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From: Gila Brock <brock@xxxxxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Subject: RE: Looking for L2 Daytraders
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FWIW, I trade Level 2 with Real Tick 3.
Gila
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