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Cima Labs Inc. (CIMA) Message Board

  • kis309 kis309 Nov 25, 2001 9:14 PM Flag


    Why are you considering selling the Jan 35 puts on CIMA? How much do you think CIMA will be at in Jan? $40+ ?

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    • The Jan 35 puts are going for 3.60 X 4.0. If I sell 10 puts on the stock for, say, $3.80, I receive $3,800 (before commissions) for my willingness to buy the stock at 35 for about 7 weeks' time. I can hold two beliefs about CIMA at this point:

      First, that CIMA will be north of 40 soon and for the duration. Therefore, the premium is mine.

      Second, that CIMA might fall below 35 during the time period, at which point I am perfectly happy to be a buyer of CIMA at 31.20 (35 - 3.80).

      If you're bullish on a stock, and right, the best money you can make is to write options (sell options) on it.