| Re: a strategy through puts by: mungerian | 01/29/05 09:14 am Msg: 121318 of 134810 |
Given that you expect a KKD bankruptcy in the next few months (I do as well), I'd think you'd be looking for more leverage and buy out of the money puts. I own Jan '06 10's and 5's and May '05 10's and 7.5's; all were out of the money when I bought them and had at potential payouts in excess of 5 to 1 in the event of KKD declaring bankruptcy and the stock going under $1. The puts with strike prices of 5 and 7.5 had potential payouts much higher than that but obviously have greater risk of expiring worthless. I prefer buying longer term puts to give the laws of financial gravity time to play out and because they allow me to add to my positions during sucker rallies. I find this strategy much less stressful than being short and if I'm right on the stock it will be far more profitable with less risk. | |
This blog is a trial and tribulations of a small investor as he finds his way into financial freedom. I will try to post some good analysis on Stock Investing from various gurus also my percpective on when to buy stocks when to sell them as well as what to look for. Also some amount macro economic issues will be discussed here.
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