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Francesco,
I'd suggest reading McMillan on Options to learn more about using options in
strategies. Presumably, if you bought a stock at 5 and sold a call/strike 5
for .55, you assumed at the time of opening the postion that the stock
wouldn't rise above 5.55 nor fall below 4.45, otherwise you're losing if the
stock falls and missing opportunity if it rises. But trying to change your
bet as it were after the cards are played isn't a strategy.
- Original Message -----
From: "Francesco Topino" <francesco.topino@xxxxxxxxxxx>
To: <omega-list@xxxxxxxxxx>
Sent: Friday, February 08, 2002 11:51 PM
Subject: Options Strategy Solution
> Hello everyone,
>
> let's say that stock XYZ is @ 5 and Mar02 5 calls are $0.55. you buy 100
> XYZ @ 5 and sell 1 Mar02 5 call pocketing the 0.55 premium. the stock
> bounces to around 6 but you believe it is a dead cat bounce and it will be
> below 5 at expiration. is there a way to lock-in the 1 point profit on the
> stock without selling the shares and risking having to cover at a loss in
> case the stock is above 6 at expiration?in other words, is there a way to
> get both the 1 point on the stock and the premium on the call? buying a
deep
> in the money put might work as long as the stock stays below 6. any
> suggestions?
>
> thanks
>
> FT
>
>
>
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