[RT] Re: Overnight disaster insurance?

["Gary Fritz" <fritz@xxxxxxxx>]

Ben wrote:
> At roll over time (DEC contract to the march contract)
> I bought 4 SP 4 ND 4 nyfe and 4 DJ

etc

Thanks very much for clarifying that, Ben!!  That approach seems to 
make a lot of sense for long-term trades like you're doing. I don't 
think it would work for a system like mine, though, where I'm in & 
out of trades in a few days and play both directions.

I will definitely keep your strategy in mind for later, though!

So if the market dips down to or below your put, do you just hold on 
and let the increase in put value take care of you while you wait for 
the market to come up again?  When it dips below the 55XMA and you 
exit your position, you hold onto the puts -- do you just let them 
expire if the market stays down for a long time?

I take it you're flat now, since we dropped below the 55XMA on 
Monday.  What level of puts where you holding when that happened -- 
1425 or so, since the mkt had been up around 1450?  You said you 
bought puts about 25pts below.  You must have to roll those up pretty 
frequently when the market goes up 25pts every couple of weeks!  
Don't the option rolls kill you?

Do you run this in the opposite direction when the market heads down?

I'll bet this approach really lowers your stress.  Not only do you 
not have to worry about getting whacked in a big move, you really 
don't even care if the market turns against you.  When it fell on 
Monday your SP/DJ/ND/NYFE positions went sour, but presumably the 
puts appreciated in value enough to counteract a lot of that.  So you 
didn't even have to worry about catching the optimum exit or anything 
like that.  Very very nice.

I never would have figured this out.  I still don't have a good feel 
for exactly how it will work out in various situations.  I couldn't 
trade it now because I don't understand exactly how to manage it.  
Guess I need to develop a better feel for options at some point...

Thanks,
Gary