Re: What do you thik about these 3 options (LEAPS)
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GOOG Jan 2007 150 PUT 3.50
INTC Jan 2008 35 CALL 1.30
YHOO Jan 2007 55 CALL .80
Jdoe
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I don't buy or sell options because they never seem to make sense. Perhaps some of the more savvy option traders can help me better understand what I'm missing. How is the PUT on GOOG a good idea? For example, let's say I believe GOOG is worth much less than today's price, but it's a great business and I'd love to get in at $150.
So I sell a put on GOOG for a thousand shares at $150, and earn $3,500. But for almost the next year and a half, I have to keep $150k available to make good on my put if GOOG does decline. This means I have to keep that cash in a money market or a CD, and earn 3-4% a year. Combined with the premium from the put, I'll make 5-5.5% per year.
Why is this a good idea? It would seem like I'd want a premium of closer to $15 so I can make at least 10% per year. Or is there another way to make money here?
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