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On Jan 31, 7:32am, Girish Patel, M.D. wrote:
> Subject: Re: Options Strategy
>
> Selling out of the money strangle is a good strategy in a high volatility
> situation, preferable over selling straddles. Of course, the risk is high in
> selling naked options, but one will make noney when the volatility returns to
> normal.
>
> This strategy, however, should be employed when the stock price is relatively
> stable. When the stock has had a run up like in your example, your risk is quite
> high. +/-10%?
If you wait to sell the straddle/strangle until the price is near
the an intermediate term average, like the 20-day average, your
odds of the price staying with bounds projected by the current
implied volatility are improved. This is just a simple method
of making sure that some of the volatility has come out of the
price before selling the straddle.
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| Gary Funck, Intrepid Technology, gary@xxxxxxxxxxxx, (650) 964-8135
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