The spirit of democracy. [volume] (Woodsfield, Ohio) 1844-1994, 1873-01-14

From the New York Tribune.l
POOR MANS STOCK-GAHiBLlNG.
Puts, Calls. and Doab,e Privileges
Explained.
Many readers of the Tribune doubtless
have been frequently puzzled by the
terms "puts. "cais," and ''double privi-
leges." Dealings in these articles were,
some years since, regarded by the better
class of brokers as species of gambling
which they declined to tolerate ,and which
the Stock Exchange prohibited on its
door by heavy penalties OF late years. !
however, the disfavor with which such
transactions were regarded has modera-
ted with the times, and, although the Ex-
change still prohibits such dealings on
its floor, members and SPECTATORS now
find ample opportunities for these trans
actions on the street and in the offices of
'.put and call brokers' who are not otIhem-
bers Of the Exchange, but who make a
speciality of this business Indeed so
large has the business become that those
who follow it receive lucrative return
without the expend dture of other capital
than their time audintelligence Que of
the dealers engagedin the business issues
the following explanation of 'sputs'' and
'calls" and ''d0uble privileges" for the
benefit Of those whoare ignorant of the
significance of the terms: 2.a s,5 "a
A"put' is a contract enabling the hol-
der to deliyer to the person signing the
same a specified number of shares Of a
specified stock at a specified price, for the
number of days ormonths agreed upon
between the purchaser and signer of the
contract A 'put" reads thus:
"For value received, the bearer may
deliver NE - shares Of the stock of tie
I--company at - per cent. any time
in--days from date. The undersigned
lis entitled to all dividends or extra divi-
dends declared during the time"
A ''call" is contract enabling the hol-
der to demand of person signing the
same specified number of shares of
specified stock at specifedprice, agreed
upon between the signer and purchaser,
within a given time A ''calP' reads
thus:
"For value received, the bearer may
call on me for shares Of the stock
of the - company At per cent any
time in - days from date The bearer
is entitled to all dividends or extra diyi-
dends declared during the times"
"Double privileges are contracts al
lowing the purchaser or holder to use
thein either way that is, the privilege of
delivering to tae signer specified num-
Der of shares of stock, at specified
price, within the time named in tile con-
tract
According to the dealer who has been
quoted aboveS the advantages of a''put'
are these:
If you propose to purchase astock ,ie.
I"go long," YOU are much safer in pocket
and easier in mind if yoii purchase put
for this reason, if you made an error N
Judgment, which the shrewdest stock ops
orators are likely to do, and the market
goes down,the privilege which you hold
of delivering the stock at price say to
II per cent. below that at which you have
bought, makes you perfectly secure, and
you ignore all panics. When you want d
broker to buy stocks for you, and carry
them for an advance, you are obliged to
deposit l0per cent margin, but if you
have an A No l"put," any broker will
buy against it as a margin. Or, if You
don't want to buy against the ''put," but
wish to stand ON ii for decline then, in
this position, you are equivalent to being
short of the market, On the other hand,
Iif you think the market too high, ,and you
wish to sell what you havernot got, i. e.,
''sell short" for thesame cost, you can
buy "call," giving you the privilege oi
demanding. 300 shares of stock at any
time during the specified period named
land against this you can sell 100 shares
short, as in the event of an advance in
the stock, instead of a decline, you are
protected by the 'call," which gives you
! the control over the stock. without actu.
ally owningit. Or, if you donot wanl
f Ito sell against the call but wish to stand
On itfor an advance, then,in this position,
you are equivalent to being long of the
market at the price named in the contract
The cost of "put'' or "call' is as fol
lows: Sayfor100 shares at 10 days,S25
!, for Is days, $50; 10000 days, 800, ano
one brokerage of 1-l6 The very best
form of privilege is the "double privi
: lege," when the bearer can call on or de.
liver to, the signer 4of the contract the
specified number of shares of stock a,
the market prices. These privileges
. are, as to time, the same as "puts" and
calls" and the time Toto go days, and the
price from $50 to $3.50. For "outsiders,'
who are not familiar with the workings
of the stock market, they are decidedly
the best contracts to purchase, as all the
. holder has to do is to remain quiet unit
the market has declined or advanced, and
then operate, purchasing against the put
, if the stock has declined, or selling
against the .scalr' if the stock has ad
van nced.
The SPECIAL advantages, il they can be
so termed, are the facilities for stock gam
bling which are thus given to poor men
who could not deal otherwise, as the mar
r gin required by the regular brokers
, would be beyond their means.