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hello
it is definetely SAFER to wait for a spike in volitility above 2 std div
to execute the trade
you can fined spikes in ivolitility.com
or freecoveredcalls.com
and do them only
will do it next time
call on this 2/15/01 and we will both learn not to make mistakes,
good shorting today
Ben
----- Original Message -----
From: <MikeSuesserott@xxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxx>
Sent: Tuesday, January 23, 2001 8:21 AM
Subject: [RT] conservative?
> Ben,
>
> here is a possible scenario: come Feb 15, suppose ITWO shares trade at 52
> which is about the price you bought them. Suppose further that volatility
> has gone up by 10%. This is certainly a possibility for this stock - has
> happened almost every month during the past year. Then the Feb puts you
are
> long from 9 1/2 might be at 2 1/2, and the May calls you are short from 13
> might be at 14. Result: a loss of about $ 8,000 on your investment of $
> 50,000. This is what volatility plus time decay can do to an option
> position!
>
> In my years of trading options I have been there, done that, quite a few
> times, more often than I care to remember. But I learned, and have now
moved
> on to more sophisticated mistakes. <g>
>
> Ben, I don't want to spoil the fun for you, and I agree that this strategy
> is great in situations where you have high volatilities that you expect to
> collapse. But it does have its pros and cons, and produces income only if
> used at the appropriate time.
>
> Regards,
>
> Michael Suesserott
>
>
>
> -----Ursprungliche Nachricht-----
> Von: proffittak@xxxxxxx [mailto:proffittak@xxxxxxx]
> Gesendet: Tuesday, January 23, 2001 12:45
> An: realtraders@xxxxxxxxxxx
> Betreff: Re: AW: [RT] conservative?
>
> hello
>
> if on 2/15/01 the price is 52 then the put would not protect me,
however
> the July
> 55 call which lost 1 month out of 2 month premium will be down from
> 13 to 6.5 at best and to 8.5 at worst
> which is PLENTY protection,
> in addition.
> this is an income position
> since it produces 48000 per year income NET on a 50000 outlay,, it
is
> terrific!
> the day before expiration if the price is 52 then will buy the March 50
> put
> buy back to close the May 55 call
> and sell the July 55 call
> still netting an additional 4000 for the next month income
>
>
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>
>
>
>
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