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Re: Puts and Calls



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<DIV>Hi Dave.</DIV>
<DIV>&nbsp;</DIV>
<DIV>What are you using to cover the put?&nbsp; When you write a put you must be 
prepared to accept the stock and pay for it at the strike price you wrote.&nbsp; 
If you are exercised you have no choice in the matter.&nbsp; With the covered 
call you must deliver the stock if you are exercised, but you all ready own it 
at a lower price than the strike you wrote.</DIV>
<DIV>&nbsp;</DIV>
<DIV>Technically&nbsp; the only way to cover a put is with another put of an 
equal or grater strike price.&nbsp; For margin purposes you can also cover a put 
by shorting the stock.&nbsp; So to have both a covered call and a covered put, 
you could own the stock, sell the call, short the stock (or buy a put) and sell 
the put.&nbsp; Trying to figure if this would ever be profitable, with 
commissions, is giving me a headache.&nbsp; Basically it would take an extreme 
move in either direction to overcome the coat of setting up such a 
position.</DIV>
<DIV>&nbsp;</DIV>
<DIV>There are times when it makes sense to have a covered call (own the stock 
and sell the call) and BUY an out of the money put.&nbsp; This reduces your max. 
risk to the difference in the two strikes.&nbsp; For example, recently you could 
have bought&nbsp; AT&amp;T (T) at about 57.&nbsp; You could have sold a leap Jan 
02 $55 Call for about 15.&nbsp; You would be protected down to 42 (57-15).&nbsp; 
At the same time you could have bought a Jan 2000 45 put for 1-1/4.&nbsp; 
Basically you have insured your position against loss until expiration in Jan. 
2000 when you would have to buy another put if the position was still 
open.</DIV>
<DIV>&nbsp;</DIV>
<DIV>Hope this helps.</DIV>
<DIV>&nbsp;</DIV>
<DIV>&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; 
&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; 
&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; Good luck and good trading,</DIV>
<DIV>&nbsp;</DIV>
<DIV>&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; 
&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; 
&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; 
&nbsp;&nbsp;&nbsp; Ray Raffurty</DIV>
<BLOCKQUOTE 
style="BORDER-LEFT: #000000 2px solid; MARGIN-LEFT: 5px; MARGIN-RIGHT: 0px; PADDING-LEFT: 5px; PADDING-RIGHT: 0px">
  <DIV style="FONT: 10pt arial">----- Original Message ----- </DIV>
  <DIV 
  style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black"><B>From:</B> 
  pressdl </DIV>
  <DIV style="FONT: 10pt arial"><B>To:</B> <A 
  href="mailto:realtraders@xxxxxxxxxxxx"; 
  title=realtraders@xxxxxxxxxxxx>RealTraders</A> </DIV>
  <DIV style="FONT: 10pt arial"><B>Sent:</B> Wednesday, July 14, 1999 9:17 
  PM</DIV>
  <DIV style="FONT: 10pt arial"><B>Subject:</B> OPT: Puts and Calls</DIV>
  <DIV><BR></DIV>
  <DIV><FONT face=Arial size=2>
  <DIV><FONT face=Arial size=2>A question relating to options..&nbsp; Is it ok 
  &nbsp;to write covered calls and covered puts on the same equity in my 
  account&nbsp; (Same expiration date --obviously different prices)??&nbsp; Does 
  it ever make sense?</FONT></DIV>
  <DIV>&nbsp;</DIV>
  <DIV><FONT face=Arial 
size=2>Dave</FONT></DIV></FONT></DIV></BLOCKQUOTE></BODY></HTML>
</x-html>From ???@??? Thu Jul 15 10:34:54 1999
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Reply-To: "RAY RAFFURTY" <rrraff@xxxxxxxx>
From: "RAY RAFFURTY" <rrraff@xxxxxxxx>
To: "kohath" <kohath@xxxxxxxxxxxxx>, <realtraders@xxxxxxxxxxxx>,
        "Alexander Levitin" <alevitin@xxxxxxxx>
References: <4.1.19990714222544.00adb6c0@xxxx>
Subject: Re: Cordless Phones
Date: Thu, 15 Jul 1999 12:06:26 -0400
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<DIV>Hi Alex,</DIV>
<DIV>&nbsp;</DIV>
<DIV>You may be right, but more importantly, it may not work in a heavy storm 
due to cloud cover.&nbsp; So if you're in&nbsp;an Atlantic hurricane (or Saharan 
sandstorm) it won't work when you need it the most.&nbsp; Have any RT's tried to 
use their Iridium phone under such conditions?</DIV>
<DIV>&nbsp;</DIV>
<DIV>&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; 
&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; 
&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; Good 
luck and good trading,</DIV>
<DIV>&nbsp;</DIV>
<DIV>&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; 
&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; 
&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; 
&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; Ray Raffurty</DIV>
<BLOCKQUOTE 
style="BORDER-LEFT: #000000 2px solid; MARGIN-LEFT: 5px; MARGIN-RIGHT: 0px; PADDING-LEFT: 5px; PADDING-RIGHT: 0px">
  <DIV style="FONT: 10pt arial">----- Original Message ----- </DIV>
  <DIV 
  style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black"><B>From:</B> 
  <A href="mailto:alevitin@xxxxxxxx"; title=alevitin@xxxxxxxx>Alexander 
  Levitin</A> </DIV>
  <DIV style="FONT: 10pt arial"><B>To:</B> <A href="mailto:kohath@xxxxxxxxxxxxx"; 
  title=kohath@xxxxxxxxxxxxx>kohath</A> ; <A 
  href="mailto:realtraders@xxxxxxxxxxxx"; 
  title=realtraders@xxxxxxxxxxxx>realtraders@xxxxxxxxxxxx</A> </DIV>
  <DIV style="FONT: 10pt arial"><B>Sent:</B> Thursday, July 15, 1999 1:31 
  AM</DIV>
  <DIV style="FONT: 10pt arial"><B>Subject:</B> Re: Cordless Phones</DIV>
  <DIV><BR></DIV>This is only hearsay. But someone told me that for Iridium 
  phone to work it need the satellite in direct visual line. That is it would 
  not work if you are in between skyscrapers, inside of the building etc. (It 
  will work in the middle of the Atlantic or Sahara). I want to emphasize that 
  it is only the story and I did not verify it (and not going 
  to).<BR><BR>Alex.<BR><BR><BR>At 01:54 PM 7/14/99 -0500, kohath wrote: 
  <BR><FONT size=2>
  <BLOCKQUOTE cite type="cite">Hey, forget cordless phones at Wal-Mart for 
    $40, get an Iridium phone, you can use it anywhere in the world, they only 
    cost $3,500 each, and the call is only $8 per minute?&nbsp; I'll take 
    2.&nbsp; Just think, you can call you broker from the middle of the Sahara 
    desert, or, if your boat sinks in the middle of the Atlantic, don't worry, 
    your cordless Iridium phone will enable you to still buy 1,000 of Mr. softy 
    before the close.&nbsp; And, to top it off, your wife is sure to love the 
    new freedom the phone brings her.&nbsp; Wonder why the stock has dropped 
    from $60 to $5 in the last year?&nbsp; Doesn't make sense! <BR>&nbsp;<BR>How 
    many of you RT have one? Two?</FONT></BLOCKQUOTE><BR></BLOCKQUOTE></BODY></HTML>
</x-html>From ???@??? Thu Jul 15 10:54:45 1999
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From: "GatorTrade" <gatortrade@xxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxx>
Subject: FW: Puts and Calls
Date: Thu, 15 Jul 1999 12:13:55 -0500
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<DIV>
<DIV><FONT color=#0000ff face=Tahoma size=2><SPAN class=630312503-15071999>Hi 
Dave,</SPAN></FONT></DIV>
<DIV><SPAN class=630312503-15071999></SPAN><FONT color=#0000ff face=Tahoma 
size=2>&nbsp;</FONT></DIV>
<DIV><FONT size=2><FONT color=#0000ff><FONT face=Tahoma><SPAN 
class=630312503-15071999>You can write a covered call if you are long the 
equity, and a covered put if you are short the equity.&nbsp; You can do both if 
you are long and short (against the box).&nbsp; If you do this, it is the same 
risk as just being uncovered on both positions, so&nbsp;<SPAN 
class=390171117-15071999>I think it makes more sense to go uncovered on both 
positions and save some trading costs.</SPAN></SPAN></FONT></FONT></FONT></DIV>
<DIV><FONT size=2><FONT color=#0000ff><FONT face=Tahoma><SPAN 
class=630312503-15071999><SPAN 
class=390171117-15071999></SPAN></SPAN></FONT></FONT></FONT>&nbsp;</DIV>
<DIV><FONT color=#0000ff face=Tahoma size=2><SPAN class=630312503-15071999>If 
I'm slightly bullish on a long position in my account and I wouldn't mind having 
more of it at a lower price, I've found it profitable to write an uncovered put 
and write a covered call.&nbsp; If the stock goes below my put strike price at 
expiration, I get put the stock and write calls on it.</SPAN></FONT></DIV>
<DIV><SPAN class=630312503-15071999></SPAN><FONT color=#0000ff face=Tahoma 
size=2>&nbsp;</FONT></DIV>
<DIV><FONT color=#0000ff face=Tahoma size=2><SPAN class=630312503-15071999>Hope 
this helps.</SPAN></FONT></DIV>
<DIV><SPAN class=630312503-15071999></SPAN><FONT color=#0000ff face=Tahoma 
size=2>&nbsp;</FONT></DIV>
<DIV><FONT color=#0000ff face=Tahoma size=2><SPAN 
class=630312503-15071999>Jim</SPAN></FONT></DIV>
<DIV><SPAN class=630312503-15071999></SPAN>&nbsp;</DIV></DIV>
<DIV class=OutlookMessageHeader><FONT face="Times New Roman" 
size=2>-----Original Message-----<BR><B>From:</B> owner-realtraders@xxxxxxxxxxxx 
[mailto:owner-realtraders@xxxxxxxxxxxx] <B>On Behalf Of</B> 
pressdl<BR><B>Sent:</B> Wednesday, July 14, 1999 8:18 PM<BR><B>To:</B> 
RealTraders<BR><B>Subject:</B> OPT: Puts and Calls<BR><BR></FONT></DIV>
<DIV><FONT face=Arial size=2>
<DIV><FONT face=Arial size=2>A question relating to options..&nbsp; Is it ok 
&nbsp;to write covered calls and covered puts on the same equity in my 
account&nbsp; (Same expiration date --obviously different prices)??&nbsp; Does 
it ever make sense?</FONT></DIV>
<DIV>&nbsp;</DIV>
<DIV><FONT face=Arial size=2>Dave</FONT></DIV></FONT></DIV></BODY></HTML>
</x-html>From ???@??? Thu Jul 15 10:54:47 1999
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From: "BrentinUtahsDixie" <brente@xxxxxxxxxxxx>
To: "Real Traders Forum" <realtraders@xxxxxxxxxxxx>
Subject: Gen: Trend and Lunar Phases 
Date: Thu, 15 Jul 1999 10:19:58 -0600
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Isn't it interesting how it is better to buy the SP with the trend whether
there is a full or a new moon. Strangely the same thing has worked with
wheat for the duration of the recent contracts only the trend is down.
Novice traders are always looking for a chance to go against the trend for
that big killing. I know I spent enough time trying to do it myself.

Brent