1
 The stock market's dizzying gyrations during the past few days have made a lot of individual investors wish
2
attribution

2
 they could buy some sort of insurance.
5001
span

3
 After all, they won't soon forget the stock bargains
5002
span

4
 that became available after the October 1987 crash.
3
elaboration-object-attribute-e

5
 But
5004
span

6
 while they want to be on the alert for similar buying opportunities now,
5
antithesis-e

7
 they're afraid of being hammered by another terrifying plunge.
5005
Same-Unit

8
 The solution, at least for some investors, may be a hedging technique 
5006
span

9
that's well known to players in the stock-options market.
8
elaboration-object-attribute-e

10
 Called a married put,
5008
circumstance

11
 the technique is carried out
5008
span

12
 by purchasing a stock
5007
Temporal-Same-Time

13
 and simultaneously buying a put option on that stock.
5007
Temporal-Same-Time

14
 It's like fire insurance,
5013
span

15
 says Harrison Roth, the senior options strategist at Cowen & Co.
14
attribution

16
 Because a put option gives its owner the right, but not the obligation,
5014
span

17
 to sell a fixed number of shares of the stock at a stated price on or before the option's expiration date,
16
elaboration-object-attribute-e

18
 the investor is protected against a sudden drop in the stock's price.
5015
span

19
 But most investment advisers don't recommend using married puts all the time.
5024
span

20
 That's because the cost of buying put options eats into an investor's profit
5023
span

21
 when stock prices rise.
20
circumstance

22
 This is the type of fire insurance 
5026
span

23
you only buy 
5025
span

24
when the nearby woods are on fire,
23
circumstance

25
 says Mr. Roth.
5026
attribution

26
 You always want your house insured,
5029
antithesis

27
 but you don't always feel the need 
5029
span

28
for your investments to be insured.
27
elaboration-object-attribute-e

29
 In addition to hedging new stock purchases,
5034
span

30
 the married-put technique can be used to protect stocks
5033
span

31
 that an investor already owns.
30
elaboration-object-attribute-e

32
 In either case, the investor faces three possible outcomes:
5056
span

33
 -- If the stock goes up in price between now and the put's expiration date,
34
condition

34
 the put will probably expire worthless.
5036
span

35
 The investor will be out the cost of the put,
5037
span

36
 which is called the premium,
35
elaboration-additional-e

37
 and this loss will reduce the stock-market profit.
5037
consequence-s

38
 -- If the stock stays at the same price between now and the put's expiration date,
5040
condition

39
 the investor's loss will be limited to the cost of the put, less any amount
5040
span

40
 realized from a closing sale of the put.
39
elaboration-object-attribute-e

41
 The worst-case scenario would be if the put expires worthless.
5041
elaboration-additional

42
 -- If the price of the stock declines,
43
condition

43
 the put will increase in value.
5043
span

44
 Once the stock price is less than the exercise price, or strike price, of the put,
45
circumstance

45
 the gain will match the loss on the stock dollar for dollar.
5044
span

46
 The put establishes a minimum selling price for the stock during its life.
5052
span

47
 When a stock falls below the put's strike price,
5047
circumstance

48
 the investor simply sells the stock at a loss 
5047
List

49
and simultaneously sells the put at a profit.
5047
List

50
 Or, the investor can exercise the put,
5050
span

51
 by tendering the stock to his or her broker in return for payment from another investor 
5049
span

52
who has sold a put on the same stock.
51
elaboration-object-attribute-e

53
 Brokers handle such transactions through the Options Clearing Corp.,
5053
span

54
 which guarantees all option trades.
53
elaboration-additional-e

55
 The accompanying table shows
56
attribution

56
 how this strategy would work for three stocks.
5058
span

57
 Though not reflected in the table,
5060
concession

58
 an investor should know 
5059
attribution

59
that the cost of the option insurance can be partially offset by any dividends 
5059
span

60
that the stock pays.
59
elaboration-object-attribute-e

61
 For example, Tenneco Inc. pays a quarterly dividend of 76 cents,
5066
span

62
 which would be received 
5065
span

63
before the February option expires 
62
temporal-before

64
and, thus, reduce the cost 
5063
span

65
of using the technique 
64
elaboration-object-attribute-e

66
by that amount.
5064
Same-Unit

67
 In this case, the investor's risk wouldn't exceed 3.6% of the total investment.
5067
elaboration-additional

68
 To simplify the calculations,
69
purpose

69
 commissions on the option and underlying stock aren't included in the table.
5069
span

70
 There are more than 650 stocks
5074
span

71
 on which options may be bought and sold,
5073
span

72
 including some over-the-counter stocks.
71
elaboration-set-member-e

73
 But some investors might prefer a simpler strategy 
5133
span

74
then hedging their individual holdings.
73
preference

75
 They can do this
5079
span

76
 by purchasing index puts,
5078
span

77
 which are simply put options on indexes
5077
span

78
 that match broad baskets of stocks.
77
elaboration-object-attribute-e

79
 For instance, the most popular index option is the S&P 100 option,
5081
span

80
 commonly called the OEX.
79
elaboration-object-attribute-e

81
 It is based on the stocks
5082
span

82
 that make up Standard & Poor's 100-stock index.
81
elaboration-object-attribute-e

83
 Unlike options on individual issues, index options are settled only in cash,
5084
List

84
 and no stock is ever tendered.
5084
List

85
 But while index options are convenient,
86
antithesis

86
 they have several disadvantages.
5089
span

87
 For one thing, an investor's portfolio might not closely match the S&P 100.
5090
span

88
 As a result, the OEX insurance may or may not fully protect an investor's holdings in the event of a market decline.
87
consequence-s

89
 In addition, OEX options were suspended from trading last Friday afternoon,
5092
span

90
 after the stock-market sell-off got under way 
89
temporal-after

91
and trading in the S&P-500 futures contract was halted.
5093
List

92
 So an investor 
5094
span

93
who wanted to realize a profit on OEX puts after the trading suspension 
92
elaboration-object-attribute-e

94
would have been out of luck.
5095
Same-Unit

95
 On the other hand, only a handful of individual issues were suspended from trading on Friday.
5100
span

96
 Normally,
5098
span

97
 once the underlying investment is suspended from trading,
96
circumstance-e

98
 the options on those investments also don't trade.
5099
Same-Unit

99
 Ultimately, whether the insurance
5107
span

100
 provided 
5106
span

101
by purchasing puts 
100
means

102
is worthwhile depends on the cost of the options.
5108
Same-Unit

103
 That cost rises in times of high market volatility.
5111
span

104
 But it still might be cheaper 
5110
span

105
than taking a major hit.
104
comparison

106
 The protection from using married puts is clearly superior to that
5114
span

107
 afforded by another options strategy 
5113
span

108
some investors consider using during troubled times:
107
elaboration-object-attribute-e

109
 selling call options on stocks 
5112
span

110
the investor owns.
109
elaboration-object-attribute-e

111
 A call option is similar to a put,
5117
span

112
 except that it gives its owner the right
5116
span

113
 to buy shares at a stated price until expiration.
112
elaboration-object-attribute-e

114
 Selling a call option gives an investor a small buffer against a stock-market decline.
5132
span

115
 That's because it reduces the cost of the stock by the amount of premium
5120
span

116
 received from the sale of the call.
115
elaboration-object-attribute-e

117
 But
5122
span

118
 if the price of the stock rises above the strike price of the option,
117
condition-e

119
 the stock is almost certain to be called away.
5123
Same-Unit

120
 And in that case, the investor misses out on any major upside gain.
5123
consequence-s

121
 These calculations exclude the effect of commissions paid and dividends 
5129
span

122
received from the stock.
121
elaboration-object-attribute-e

123
 All prices are as of Monday's close.
5129
elaboration-additional

5001
span
5003
span

5002
span
5001
explanation-argumentative

5003
span
5020
span

5004
span
5005
Same-Unit

5005
multinuc
5018
problem-solution-n

5006
span
5018
span

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multinuc
11
means

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span
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span

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span
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elaboration-general-specific

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span



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span



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span



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span
5022
span

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span
18
reason

5015
span
5013
elaboration-additional

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span



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span



5018
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5019
span

5019
span
5021
span

5020
span
5105
span

5021
span
5032
span

5022
span
5019
analogy

5023
span
5028
span

5024
span
5021
antithesis

5025
span
22
elaboration-object-attribute-e

5026
span
5027
span

5027
span
5031
span

5028
span
19
explanation-argumentative

5029
span
5030
span

5030
span
5027
interpretation-s

5031
span
5023
elaboration-additional

5032
span
5057
span

5033
span
29
elaboration-additional

5034
span
5035
span

5035
span
5032
elaboration-additional

5036
span
5039
span

5037
span
5038
span

5038
span
5036
elaboration-additional

5039
span
5055
List

5040
span
5041
span

5041
span
5042
span

5042
span
5055
List

5043
span
5045
span

5044
span
5043
elaboration-additional

5045
span
5046
span

5046
span
5055
List

5047
multinuc
5048
span

5048
span
5051
Disjunction

5049
span
50
means

5050
span
5054
span

5051
multinuc
5072
span

5052
span
5045
elaboration-additional

5053
span
5050
elaboration-additional

5054
span
5051
Disjunction

5055
multinuc
32
elaboration-set-member

5056
span
5034
elaboration-additional

5057
span
5003
elaboration-additional

5058
span
5062
span

5059
span
5060
span

5060
span
5061
span

5061
span
5070
span

5062
span
5071
span

5063
span
5064
Same-Unit

5064
multinuc
5066
consequence-s

5065
span
61
elaboration-object-attribute-e

5066
span
5067
span

5067
span
5068
span

5068
span
5061
example

5069
span
5062
elaboration-additional

5070
span
5058
elaboration-additional

5071
span
5051
elaboration-additional

5072
span
46
elaboration-additional

5073
span
70
elaboration-object-attribute-e

5074
span
5133
circumstance

5075
span



5076
span
5079
problem-solution-n

5077
span
76
elaboration-object-attribute-e

5078
span
75
means

5079
span
5086
span

5080
span



5081
span
5083
span

5082
span
5081
elaboration-additional

5083
span
5086
example

5084
multinuc
5087
elaboration-additional

5085
span



5086
span
5087
span

5087
span
5088
span

5088
span
5104
span

5089
span
5102
span

5090
span
5089
example

5091
span



5092
span
5093
List

5093
multinuc
5095
result

5094
span
5095
Same-Unit

5095
multinuc
5096
span

5096
span
5101
span

5097
span



5098
span
5099
Same-Unit

5099
multinuc
95
elaboration-additional

5100
span
5096
antithesis

5101
span
5102
elaboration-additional

5102
span
5103
span

5103
span
5088
antithesis

5104
span
5020
elaboration-additional

5105
span
5128
span

5106
span
99
elaboration-object-attribute-e

5107
span
5108
Same-Unit

5108
multinuc
5109
span

5109
span
5119
span

5110
span
103
antithesis

5111
span
5108
elaboration-additional

5112
span
5118
span

5113
span
5115
span

5114
span
5127
span

5115
span
106
elaboration-object-attribute-e

5116
span
111
antithesis

5117
span
5112
elaboration-additional-e

5118
span
5113
elaboration-object-attribute-e

5119
span
5105
elaboration-additional

5120
span
114
explanation-argumentative

5121
span



5122
span
5123
Same-Unit

5123
multinuc
5124
span

5124
span
5126
span

5125
span



5126
span
5114
elaboration-additional

5127
span
5109
elaboration-additional

5128
span
5131
Topic-Shift

5129
span
5130
span

5130
span
5131
Topic-Shift

5131
multinuc



5132
span
5124
antithesis

5133
span
5076
span

