tag:blogger.com,1999:blog-30128229.post1187922184870994630..comments2023-09-30T07:11:55.493-06:00Comments on MarketFN.com: Deciding Upon ProtectionInvestment Househttp://www.blogger.com/profile/14771320644915759241noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-30128229.post-40378717052318105072010-03-08T07:47:04.938-07:002010-03-08T07:47:04.938-07:00Bill … excellent article … perhaps in a future new...Bill … excellent article … perhaps in a future newsletter you may want to mention the use of a “collar” trade to protect long positions at a very low cost … for me, this strategy works best for stocks that I expect to move up only moderately while protecting against a sudden drop …Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-30128229.post-66106326825025024152010-03-07T15:29:25.226-07:002010-03-07T15:29:25.226-07:00Right, Nona, the put can be sold without selling t...Right, Nona, the put can be sold without selling the stock. However, if a stock is falling and you sell the put you might well make a nice profit on the put but you still own a falling stock so if the stock is still heading down, a trader might want to get rid of both the profitable put and the losing stock at the same time. On the other hand, if the stock has turned back up, selling the put to take that profit and keeping the stock for any run up might be the choice.<br />Bill KraftBill Kraft, MarketFN.comhttps://www.blogger.com/profile/08274803638438137352noreply@blogger.comtag:blogger.com,1999:blog-30128229.post-20068901714182142292010-03-06T19:40:36.151-07:002010-03-06T19:40:36.151-07:00I can sell the put WITHOUT selling the stock, righ...I can sell the put WITHOUT selling the stock, right? (I understand now that I can exercise it at any time.)<br /><br />If so, it seems to me that I can keep buying low-cost insurance inasmuch farther out puts are at lower prices. Similarly, if the price of the stock increases, then I can buy higher strike puts -- and far out ones, at that.<br /><br />Again, THANK YOU for the education!!~ Nonahttps://www.blogger.com/profile/04365667143864520037noreply@blogger.comtag:blogger.com,1999:blog-30128229.post-47269180967490597072010-03-06T16:55:05.396-07:002010-03-06T16:55:05.396-07:00Thanks for writing, Nona. When you have purchased ...Thanks for writing, Nona. When you have purchased protective puts, you can exercise them at any time until expiration. However, many traders would sell the put rather than exercise it when there is time left since the premium they would get would include any in the money value plus time value. Selling the put enables the trader to get the time value in addition to the intrinsic value and they can sell the stock at the same time they sell the put. Hope that helps.<br />Bill KraftBill Kraft, MarketFN.comhttps://www.blogger.com/profile/08274803638438137352noreply@blogger.comtag:blogger.com,1999:blog-30128229.post-85521562095605529452010-03-06T12:20:16.258-07:002010-03-06T12:20:16.258-07:00Never mind!
I just re-read your post and learned ...Never mind!<br /><br />I just re-read your post and learned that by using protective puts, one can assign a stock any time before expiration.<br /><br />Hmmmm..... I'm liking this protective puts insurance idea even more!<br /><br />THANK YOU!~ Nonahttps://www.blogger.com/profile/04365667143864520037noreply@blogger.comtag:blogger.com,1999:blog-30128229.post-33980258517926817252010-03-06T12:12:51.473-07:002010-03-06T12:12:51.473-07:00As I think about your detailed comments re: protec...As I think about your detailed comments re: protective puts compared to stop losses, I'm beginning to understand the issue differently.<br /><br />It strikes me that one can buy very cheap insurance indeed by buying very far out protective puts. Am I also right in assuming that I would have to wait until expiration to exercise the puts if my stock's price fell sharply, even drastically? Obviously, I've never bought a protective put -- and I can definitely look back and say "I wish I had".<br /><br />There are so many countervailing views re: this market. Maybe one should buy quality, dividend-paying stocks with (renewable) "insurance"!<br /><br />Again, thank you very much for this post. It opened up my thinking re: protective puts versus stops. I value -- and needed -- that deeper understanding.~ Nonahttps://www.blogger.com/profile/04365667143864520037noreply@blogger.com