InstantForum.NET v4.1.4SINLetter Investment Forumshttp://forums.sinletter.com/"Asif Suria" asif@sinletter.comThu, 20 Nov 2008 10:44:54 GMT20http://forums.sinletter.com/Topic79-7-1.aspx2007 was an interesting year that I started with an overall negative view of the market but with the realization that markets rarely react the way you expect them to and there are always opportunies. </P><P>Derivatives to me are a tool that can be utilized to maximize returns (naked puts/calls), manage risk (covered puts) or to earn income (writing puts/calls). In most cases I prefer them to actually shorting a stock because I know the extent of the loss I can incur. The hardest part about them for me is the time decay or the theta of options. <A href="http://www.sinletter.com/blogComment.aspx?id=147">Strangling Apple</A> proved to be an interesting experience and a good lesson. I approach derivatives as a tool to hedge my portfolio and tend to keep position sizes small.</P><P>Despite the focus on options, I actually added 14 new long positions through the course of the year and one short position.</P><P>Thank you for taking the time to read my newsletters. Mon, 31 Dec 2007 22:58:13 GMTsinnerManhttp://forums.sinletter.com/Topic79-7-1.aspxAsif,<br><br>I've been reading your newsletters for quite awhile. I noticed in the past year, though, that you tended to utilize options and puts much more than previously. In the economic climate, obviously, it was much more cost-efficent to buy puts than to short any stocks out there.<br><br>In general though, what are your views on derivatives? Before reading your reasoning behind your puts on home builders and lenders, the only exposure I had to them was through the Black-Scholes pricing formulas. <br><br>Could you elaborate in a broad sense how you approach using these derivatives? <br><br>Thanks and keep it up!Mon, 31 Dec 2007 18:39:28 GMTmftotten