Advanced Micro Devices - Moderated (AMD)

To: Elmer Phud who wrote (270065)	5/23/2012 11:03:20 PM
From: rzborusa	of 272562

Yes they are but I'd have to buy back the $6 Puts at a loss. Oh yeah, but the thing is being short puts when in the money is tantamount to owning the underlying if the underlying goes down further. You probably know that with out me spouting off. I read different rooms around here and there. Just in the last 24 hours I've read Europe will loose half its population. Why you ask? Half will be dead .... OTOH, there are people like me who will believe anything said by an AMD spokesperson. I assume you are somewhere in between those extremes. I know you will do well over all with an occasional misstep.

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To: Elmer Phud who wrote (270067)	5/24/2012 12:37:50 PM
From: rzborusa	of 272562

Add more time and a later $5 Put becomes more valuable than my June $6 Put. Options dates only go out a couple of years. But that in its self is quite a long time to be on the hook. I think you are looking at todays prices for tomorrow's trade. If you are trying to sell 5$ Ps when the Shares are at 4 don't expect much in the way of time premium. Just pull up the option chain for leaps and see what the premium for well into the money options is, not much because there is the "in the money" intrinsic value that is at risk if the SP heads north. Just take a look at 7 or 8$ leap puts. They barely even trade at all. I'm just pointing out an exception to your reasonable scenario, like if the shares gap down.

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To: rzborusa who wrote (270068)	5/24/2012 1:22:32 PM
From: Elmer Phud	of 272562

I'm just pointing out an exception to your reasonable scenario, like if the shares gap down. And you're right. No trade is a guaranteed winner. If they were I'd have done the trade for 10X more, or as far as my margin would let me. It's a gamble. I'm gambling that AMD will not stay below $6. The ability to roll the option just gives me more time for AMD to come back. Time decay works for me. I can make another $0.20 by rolling to July. That's an annualized return of 37.45% according to my options price model. I'm betting that AMD will eventually come back to above $6 and that I can stay ahead of assignment while getting paid to do it. Do you really think that's such a bad bet? I don't.

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