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Earl he could creat a sythetic contract and effectivly exit the market.
I have done this in limit situations and it has saved my butt.
----- Original Message -----
From: Earl Adamy <eadamy@xxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxx>
Sent: Thursday, August 12, 1999 11:25 AM
Subject: Re: RT_Re: Limit Down
> Although I've read Macmillan's original book on options, I haven't traded
> them in years and when I did I generally wrote covered calls. My
experience
> in using options in a case like this is nil. That said, I'll venture a few
> comments. Generally the safe returns are earned by selling premium rather
> than buying premium. Also, premiums are generally highest when directional
> volatility is highest. In this case, where downside volatility is
extremely
> high, one could expect to pay dearly in premium for the put while earning
> little in premium for the call. Assuming the initial move is approaching
> support, one could reasonably expect the short volatility premium to
> contract and the long volatility premium to remain flat or expand. Thus
from
> an options standpoint, I would want probably seek to sell put premium and
> buy call premium. While this might well be a sound approach as an options
> trade, it would only compound and complicate the problem of the current
long
> position - the very reason why I prefer to run simple long and short
futures
> trades.
>
> Earl
>
> ----- Original Message -----
> From: RAY RAFFURTY <rrraff@xxxxxxxx>
> To: <realtraders@xxxxxxxxxxxx>; Howard Hopkins <hehohop@xxxxxxxxxxx>
> Cc: Real Traders <realtraders@xxxxxxxxxxxxx>
> Sent: Thursday, August 12, 1999 11:24 AM
> Subject: RT_Re: Limit Down
>
>
> > Hi Howard,
> >
> > As you may know, you can create a synthetic position with options. To
> > create a synthetic short position, the opposite of your long position,
you
> > BUY a put and Sell a call. If you buy the put and sell the call at the
> same
> > strike price, you will have the equivalent of a short future position to
> > offset your long future position. You may lock in a small loss but it
> will
> > be better than days of lock limit down. Call your broker, hopeful he
> will
> > be able to suggest to best options to hedge your longs.
> >
> > Other suggestions, anyone?
> >
> > Good luck and god trading,
> >
> > Ray Raffurty
> >
> > P.S. For your owe protection, please learn option strategies before you
> > continue trading.
>
>
>
>
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