Re: [RT] GEN: The synthetic straddle trade EMC

["Gitanshu Buch" <onwingsofeagles@xxxxxxxxxxxxx>]

Here's an example of what worked: See chart for number 
references.
 
1. Bot 90 calls for 7/8. Cost 87.5 x 2 = 175 = capital outlay 
step 1.
2. Short stock at 88 7/8 = capital outlay step 2.
Here the max risk is the inital capital outlay + 1 1/8 which 
is the distance from short entry to strike price.
 
3. Covered stock at 86 1/2. Gain 237.50
4. Short stock at 90. Calls were bid 250 x 2 = worth 500. 
Could sell calls & call it a day.
5. Covered stock at 86 1/2. Gain 350.00
 
Currently: Holding 90 calls, now bid 9/16 
bid x 2 = worth 112.50. 
 
Total position profit/loss:
On stock: Gain 587.50 per 100 shares.
On calls: Loss 62.50
Net Net: Gain 525 less commission.
 
Going forward:
 
I could sell the 90 calls and realize the 9/16 cash, or short 
stock if it rallies --> fails or sell the calls for more than 9/16 when it 
rallies and go home, or short 85 calls if it doesn't rally or I just do nothing 
and sit on the calls hoping that XYZ will come in humongo short EMC and get a 
margin call tonight after it preannounces that it has cracked the puzzle of life 
and taken responsibility that they will singlehandedly achieve the entire 
S&P 500's earnings goal for Q4.
 
Multiple choices, created by initial position and by stock's 
price behavior.
 
Hence, the initial position = working capital; no directional 
bias, 
 
Hope this & attached chart clarifies where I was coming 
from.
 
Gitanshu






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