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Martin,
VESA is not a valid ticker, where did you get this ? However, I
suspect you have type error, you probably mean VSEA.
I missed the LEAPS in your email, LEAPS is a longer term contract,
typically 9 months and above. Most unfortuate, LEAPS was not available
for the VSEA, so you have to go for normal option. The UESQD that you
are eyeing is less than 2 months. The time value of option declines
very fast on the last month and you would loose all your premium.
Quote: "For a PUT on the DOW does drop 50% I would be up how much?
Obviously if I am wrong it is all gone."
Assuming the PUT is ATM, delta would be 0.5, a $1 decline in DOW
underlying would make PUT appreciates by 50cts( $50 for 1 contract).
As the underlying continues to drop, PUT position will be ITM and
delta will be increasing, your PUT will move faster than previous
position. However, high delta can also be risky, if underlying is
against you, PUT will decline by the same amount that you would have
gained in the other direction. Hope you follow the logic. The
volatility is another area of concern which I am still studying. It
affects the option value alot more. One can loose trade due to
volatility issues. Sounds scarry.
Reagrding the bottoming in 2006, is this reliable info. Any specific
event associate with it ? Can you show me the link to the chart that
shows the 50% drop.
Best Regards
Freddie Ng
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