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I second that. Immediately after a run up, there will be a higher risk, especially
selling puts. Selling strangles is a good strategy when the market is reasonably
stable.
Girish Patel
Gary Funck wrote:
> 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.
>
> --
> --
> | Gary Funck, Intrepid Technology, gary@xxxxxxxxxxxx, (650) 964-8135
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