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If you are going to play the game, play the game. Why not buy the 35's at 7
5/8, sell the 40's and 45's for 6 3/8 and pay 3/4 for the 50's. The cost is 2
and DELL is trading at 42. You have a max profit between 40 and 45 or 5 and a
total risk of 2. If you are a trader this is ideal because you can trade the
40's and 45's to hearts content on the way up and and trade the 35 on the way
down. Always leaving the condor on overnight.
Take a look at what would have happened today. Assuming that the options
opened unchanged as the stock did and I didn't follow either during the day so
some adjustments might have to be made. If you bought in the 45 calls,
conservative buy and sold out at the close you are zero +/-.
The 50's gained 3/8 and the 35's gained 2 5/8 for a total of 3 and the 40's
lost 1 3/4 for a net gain of 1 1/4. One should look at any options position as
a trading vehicle. Something to generate cash flow. This is especially true
in the volatile stocks.
There are so many options trading strategies that allow for unlimited profit
and limited risk, why establish one that will allow only limited profit. Trade
'em. Ira.
Parnos1@xxxxxxx wrote:
> If you want a conservative play:
> 1) Buy the Dell 37.5 Call for 5 7/8
> 2) Sell the Dell 40 Call for 4 1/4
> Your out of pocket cost is 1 5/8. Your profit potential is 7/8 as long as
> Dell finishes above 40 -- which seems very likely.
> If you want to be a little more daring:
> 1) Buy the Dell 40 Call for 4 3/8
> 2) Sell the Dell 42.5 Call for 3
> Your out of pocket cost is 1 3/8. Your profit potential is 1 1/8 if Dell
> finishes above $42.50 -- which certainly seems reasonable since it finished
> the day at 41 7/8.
> If you trade a decent number of contracts, you can pick up a nice piece of
> change using these conservative option plays and not risking a lot.
> Good luck (Remember, it's better to be lucky than good)
> Mike Parnos
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