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- Path: sparky!uunet!ogicse!uwm.edu!ux1.cso.uiuc.edu!news.cso.uiuc.edu!usenet
- From: cs101a64@eng-nxt01.cso.uiuc.edu (cs101 student)
- Newsgroups: misc.invest
- Subject: Re: Writing options
- Message-ID: <Bxxz46.CoM@news.cso.uiuc.edu>
- Date: 19 Nov 92 02:33:39 GMT
- Article-I.D.: news.Bxxz46.CoM
- References: <sf0xNz70Bwx58D1FB0@transarc.com>
- Sender: usenet@news.cso.uiuc.edu (Net Noise owner)
- Organization: University of Illinois at Urbana
- Lines: 20
-
- In article <sf0xNz70Bwx58D1FB0@transarc.com> writes:
- > So say I have 1000 shares of USAir and I want to write call options
- > since I believe that even though the stock is going to go up it
- > will not do it at a fast pace. So the stock is trading around 13 1/2
- > how do I compute the cost of each option, for which month should
- > I write it for? is it worth it to write a smaller block or am
- > I just going to pay per contract?
- >
- > Feel free to use any other company and
- > thanks,
- > Jim.
- >
- Don't mess around in the futures market. It is hopelessly complicated.
- If you use the futures market as a hedge, you are defeating the purpose of
- owning the stock in the first place. If the stock rises, the hedge costs
- you your profits. Instead, you should invest for value, as Benjamin
- Graham and David Dodd did. Buy stocks that sell for 2/3 of book value or
- less and have either a dividend yield at least 2/3 that of a AAA bond or
- an earnings yield at least 4/3 that of a AAA bond. Over the long run, you
- will outperform the market with less risk.
-