|
PureBytes Links
Trading Reference Links
|
>Problem I have run into with this method is that options and future do
>not expire on the same date. You are then faced with a decision to
>liquidate both or hold onto the future (when it is profitabel) some
>more?
>John Ahaus
True, but I think in most cases the problem is irrelevant.
Some options expire about a month or so ahead of contract expiration and
maybe a couple of weeks before FND when speculators should be thinking
about rolling over.
So at option expiration, one of three things has occured
1) Your position is extremely profitable. Congratulations! BUT..if you want
to continue holding the position you'd have to be rolling it over soon
anyway, in which case you could buy another option ("insurance policy") for
that contract.
2) Your position is extremely unprofitable. Shouldn't you be thinking about
whether this trade is dog meat? Wouldn't it be time to just get out and
reevaluate your thinking on the next available contract? Oh, and
congratulations...the option you purchased help absorb at least some of
your losses.
3) Your position is roughly break even. Probably the worst outcome. You're
not sure what's going on. Still, you've gotta be thinking about rolling
over anyway if you want to continue holding the position.
-RB
|