|
PureBytes Links
Trading Reference Links
|
For one thing, Ben, this position, though well protected, cannot be called a
no-loss situation. It is definitely sensitive to time decay, as well as to
any rise in volatility. Worst case on Feb. 15 would be a stock price of
around 52 after wild rides up and down during the previous few days,
resulting in high volatilities; this scenario would most probably bring on a
painful loss. Of course, you might sell more premium then at the next
expirations, hoping to recover the loss, but that would have to be regarded
as a new trade that would be incurring new risk again. And, of course, you
might be able to adjust or unwind the position at an earlier time with only
a small loss, but this would also rob you of the chances to profit further
from this position.
hello
if on 2/15/01 the price is 52 then the put would not protect me, however
the July
55 call which lost 1 month out of 2 month premium will be down from
13 to 6.5 at best and to 8.5 at worst
which is PLENTY protection,
in addition.
this is an income position
since it produces 48000 per year income NET on a 50000 outlay,, it is
terrific!
the day before expiration if the price is 52 then will buy the March 50 put
buy back to close the May 55 call
and sell the July 55 call
still netting an additional 4000 for the next month income
eGroups Sponsor
Choose 3 DVDs for $0.49 each!
To unsubscribe from this group, send an email to:
realtraders-unsubscribe@xxxxxxxxxxx
|