Biotech Values

[zebra4o1]

Shorting DNA versus Buying Puts

Dew,

I like your Poisson process analysis of DNA. It sure looks like an interesting short candidate. But what do you think about buying puts instead? You can buy an $80 Jan 2005 leap for $3.15 a share, or a 2006 leap for $6.05 a share. And its not like you don't make any profit if the stock doesn't go below your strike price. If DNA starts to fall, the price of these out-of-the-money puts rises - with leverage.

I've never tried shorting before - seems pretty scary. Anyway, most of my non IRA/401K portfolio is in small cap stocks which, as I understand it, can't be used as a margin collateral. Never bought an option before either, but I plan to try it a few times to see how it works.