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Philip Schmitz wrote:
>
> The workings of the newbie's mind will be evident in the post below,
> but I would very much appreciate the feedback of the resident options
> aces.
>
> Buy 2 January soybean 525 calls @ 21
> Sell 1 January futures at the market (assuming it stays reasonably
> close to Friday's close at 628.25.)
Hi Phil,
I agree with your reasoning to a point. first of all, yes your
position would be fairly Delta reaonable. However, Bean delta
offsets can change so quickly, you won't know what hit you! <g>
I have been watching Beans closely because of the situation you
mention. How I have been handling it, is to buy ATM straddles
every time the vol hits historical lows. If the market continues
to break down (As it has done for months now) liquidate the profitable
put and hold the call. In this way, you can amass a powerfull long
position with little out of pocket.
Using this strategy I think I am long 20 or 30 calls. If the market
never recovers in time, it doesn't cost me anything. If it explodes
up, I'm RICH. <g>
Regards,
Walt Downs
CIS Trading
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