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Here is a BOLD move
I open an ira roll with just 5025
see copy of account history
this was to continue to demonstrate in real life
an example that works(even with large commission for selling 1 call and buying 1
put)
this shows the ACTUAL buys and sell with comm
and prices,,
and even with qqq down so much since the purchase
my account is still up in a down market
call short is ahead 3.7 minus
closing price 2.05
put is ahead bought at 1 and closing is
2.15
WERE is the DD?
I will continue to post this at ANY time someone
asks
nice evening
Ben
this is an educational purpose only and SHOULD not be taken as
a trading recommendation
options trading involves risk if not set up
correctly
<BLOCKQUOTE
style="PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
----- Original Message -----
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
Ray
Raffurty
To: <A title=realtraders@xxxxxxxxxxxxxxx
href="mailto:realtraders@xxxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxxx
Sent: Monday, February 18, 2002 2:29
AM
Subject: Re: [RT] Selling Covered
Calls
Hi all,
Here is a chart comparing Ben's trade as
described (in blue) and the spread described by Mike (in red). The
graphs are shaped similarly, but the results are considerably different.
If Ben's numbers are correct he found an excellent trade with the difference
in price of the options bought and sold equal to 2.35. A more
typical net would be about 0.95 to 1.05.
The second chart shows similar trades using
today's prices on March and April options. The blue line represents
long 2000 QQQ at 34.37, short 20 March 35 calls @ 1.85, and long 20 Feb 34 put
@ 1.30 The red line is long 20
March 34 puts at 1.3 and short 20 April 36 puts at 2.95.
All are at expiration of the nearest
option.
Good luck and good trading,
Ray Raffurty
<TABLE style="WIDTH: 946pt; BORDER-COLLAPSE: collapse" cellSpacing=0
cellPadding=0 width=1257 border=0 x:str>
<COL style="WIDTH: 84pt; mso-width-source: userset; mso-width-alt: 4096"
width=112>
<COL style="WIDTH: 52pt; mso-width-source: userset; mso-width-alt: 2523"
width=69>
<COL style="WIDTH: 53pt; mso-width-source: userset; mso-width-alt: 2560"
width=70>
<COL style="WIDTH: 44pt; mso-width-source: userset; mso-width-alt: 2121"
span=2 width=58>
<COL style="WIDTH: 54pt; mso-width-source: userset; mso-width-alt: 2633"
width=72>
<COL style="WIDTH: 58pt; mso-width-source: userset; mso-width-alt: 2816"
width=77>
<COL style="WIDTH: 52pt; mso-width-source: userset; mso-width-alt: 2523"
width=69>
<COL style="DISPLAY: none; mso-width-source: userset; mso-width-alt: 2340"
span=2 width=0>
<COL style="WIDTH: 68pt; mso-width-source: userset; mso-width-alt: 3291"
width=90>
<COL style="DISPLAY: none; mso-width-source: userset; mso-width-alt: 2816"
width=0>
<COL style="WIDTH: 61pt; mso-width-source: userset; mso-width-alt: 2962"
width=81>
<COL style="WIDTH: 67pt; mso-width-source: userset; mso-width-alt: 3254"
width=89>
<COL style="WIDTH: 35pt; mso-width-source: userset; mso-width-alt: 1718"
width=47>
<COL style="WIDTH: 52pt; mso-width-source: userset; mso-width-alt: 2523"
width=69>
<COL style="WIDTH: 78pt; mso-width-source: userset; mso-width-alt: 3803"
width=104>
<TD class=xl26 style="WIDTH: 84pt; HEIGHT: 15pt" width=112
height=20>
<A
name=RANGE!B101:B102>qqq
<A
name=RANGE!C101>6
Stock Price
<A
name=RANGE!B102>38.00
Deal Date
<A
name=RANGE!F102:F103>2/15/2002
<TD class=xl43 style="BORDER-RIGHT: red 1pt solid; mso-ignore: colspan"
align=middle colSpan=4>Strategy Comparison
<TD class=xl27 style="mso-ignore: colspan" colSpan=2
x:str="' Days to Expiry:"><SPAN
style="mso-spacerun: yes"> Days to
Expiry:
61
<TD class=xl24
style="WIDTH: 144pt; HEIGHT: 39pt; mso-ignore: colspan-rowspan" width=192
colSpan=3 height=52 rowSpan=3>
<IMG class=shape height=49
v:shapes="_x0000_s5193" v:dpi="96">
<IMG class=shape height=51
alt="Cycle through time to Expiration"
v:shapes="_x0000_s5201" v:dpi="96">
Brokerage etc.
(100)
Deal Expiration
<A
name=RANGE!F103>3/15/2002
<TD class=xl27 style="mso-ignore: colspan" colSpan=2
x:str="' Analysis Date:"><SPAN
style="mso-spacerun: yes"> Analysis
Date:
<A
name=RANGE!P103>1/13/2002
Volatility
<TD class=xl28 style="BORDER-TOP: medium none" align=right
x:num="00.35">35.00%
Dividend
<SPAN
style="MARGIN-TOP: 14px; Z-INDEX: 6; MARGIN-LEFT: 84px; WIDTH: 169px; POSITION: absolute; HEIGHT: 26px; mso-ignore: vglayout"><IMG
width=169 v:shapes="_x0000_s5213" v:dpi="96"><SPAN
style="mso-ignore: vglayout2">
<TD class=xl24 style="WIDTH: 68pt; HEIGHT: 12.75pt" width=90
height=17>
Ex date
Price Calculation
Model:
<SPAN
style="MARGIN-TOP: 13px; Z-INDEX: 4; MARGIN-LEFT: 23px; WIDTH: 167px; POSITION: absolute; HEIGHT: 62px; mso-ignore: vglayout">
<IMG class=shape height=26
alt="Clear (Red) Strategy"
v:shapes="_x0000_s5198" v:dpi="96">
<IMG class=shape height=26
alt="Reset days to maximum"
v:shapes="_x0000_s5194"
v:dpi="96"><SPAN
style="mso-ignore: vglayout2">
<TD class=xl24 style="WIDTH: 48pt; HEIGHT: 12.75pt" width=64
height=17>
Option Trades:
<TD class=xl85 style="BORDER-TOP: medium none; WIDTH: 52pt"
width=69>Action: Buy/Sell
Type
No.
Strike
Implied Volatility
Trade Expiry
<TD class=xl86 style="BORDER-TOP: medium none; WIDTH: 52pt"
width=69>Override Price
voltlty
Expiry
Days to Expiry
Price Used
Calculated Price
Initital Deb/Cred
Delta
Status
Option Trade 1
<A
name=RANGE!B108:H112>b
p
<TD class=xl63 style="BORDER-TOP: medium none" align=right
x:num="2000">2,000
<TD class=xl53 style="BORDER-TOP: medium none" align=right
x:num>34.00
<TD class=xl76 style="BORDER-TOP: medium none" align=right
x:num="37330">3/15/2002
35.0%
3/15/2002
28
0.199263
0.1993
(399)
-0.11
Out' money
Option Trade 2
s
p
2,000
36.00
4/19/2002
35.0%
4/19/2002
63
1.174268
1.1743
2,349
-0.31
Out' money
<TD class=xl24
style="WIDTH: 144pt; HEIGHT: 25.5pt; mso-ignore: colspan-rowspan"
width=192 colSpan=3 height=34 rowSpan=2><SPAN
style="mso-ignore: vglayout">
<IMG class=shape height=26 alt="Reset days to minimum"
v:shapes="_x0000_s5196" v:dpi="96">
Option Trade 3
35.0%
3/15/2002
<TD class=xl24 style="COLOR: white; mso-ignore: style" align=right
x:num>9999
Option Trade 4
35.0%
3/15/2002
<TD class=xl24 style="COLOR: white; mso-ignore: style" align=right
x:num>9999
<TD class=xl24
style="WIDTH: 144pt; HEIGHT: 39pt; mso-ignore: colspan-rowspan" width=192
colSpan=3 height=52 rowSpan=3>
<IMG class=shape height=26 alt="Switch to table view"
v:shapes="_x0000_s5370" v:dpi="96">
Option Trade 5
35.0%
3/15/2002
<TD class=xl24 style="COLOR: white; mso-ignore: style" align=right
x:num>9999
1,950
Stock Trades:
Action: Buy/Sell
<SPAN
style="mso-spacerun: yes"> No. Shares
<SPAN
style="mso-spacerun: yes"> Price
<SPAN
style="MARGIN-TOP: 4px; Z-INDEX: 9; MARGIN-LEFT: 109px; WIDTH: 506px; POSITION: absolute; HEIGHT: 77px; mso-ignore: vglayout">
<SPAN
style="MARGIN-TOP: 12px; Z-INDEX: 12; MARGIN-LEFT: 11px; WIDTH: 134px; POSITION: absolute; HEIGHT: 31px; mso-ignore: vglayout"><IMG
class=shape height=31 alt="Absolute Price"
v:shapes="_x0000_s5346" v:dpi="96"><SPAN
style="MARGIN-TOP: 0px; Z-INDEX: 13; MARGIN-LEFT: 10px; WIDTH: 232px; POSITION: absolute; HEIGHT: 73px; mso-ignore: vglayout"><IMG
class=shape height=73 alt="Show stock price as "
v:shapes="_x0000_s5347" v:dpi="96"><SPAN
style="MARGIN-TOP: 43px; Z-INDEX: 14; MARGIN-LEFT: 11px; WIDTH: 212px; POSITION: absolute; HEIGHT: 24px; mso-ignore: vglayout"><IMG
class=shape height=24 alt="Percent Change from current price"
v:shapes="_x0000_s5348" v:dpi="96"><IMG height=77
v:shapes="_x0000_s5363 _x0000_s5344 _x0000_s5362">
<IMG class=shape height=30
alt="Include funding cost/revenue in P&L"
v:shapes="_x0000_s5342" v:dpi="96">
<SPAN
style="mso-ignore: vglayout2">
<TD class=xl27 style="WIDTH: 84pt; HEIGHT: 12.75pt" width=112
height=17>Stock Trade 1
<A
name=RANGE!B115:D116>
38
Stock Trade 2
38
38
<SPAN
style="MARGIN-TOP: 4px; MARGIN-LEFT: 8px; WIDTH: 998px; POSITION: absolute; HEIGHT: 366px; mso-ignore: vglayout"><IMG
width=998 v:shapes="_x0000_s5158" v:dpi="96"><SPAN
style="mso-ignore: vglayout2">
<TD class=xl24 style="WIDTH: 84pt; HEIGHT: 13.5pt" width=112
height=18>
<TD class=xl24
style="WIDTH: 174pt; HEIGHT: 51.75pt; mso-ignore: colspan-rowspan"
width=232 colSpan=3 height=69 rowSpan=4><SPAN
style="mso-ignore: vglayout">
<IMG class=shape height=47 alt="Switch to Main Screen"
v:shapes="_x0000_s5285" v:dpi="96">
<TABLE style="WIDTH: 946pt; BORDER-COLLAPSE: collapse" cellSpacing=0
cellPadding=0 width=1257 border=0 x:str>
<COL
style="WIDTH: 84pt; mso-width-source: userset; mso-width-alt: 4096"
width=112>
<COL
style="WIDTH: 52pt; mso-width-source: userset; mso-width-alt: 2523"
width=69>
<COL
style="WIDTH: 53pt; mso-width-source: userset; mso-width-alt: 2560"
width=70>
<COL
style="WIDTH: 44pt; mso-width-source: userset; mso-width-alt: 2121"
span=2 width=58>
<COL
style="WIDTH: 54pt; mso-width-source: userset; mso-width-alt: 2633"
width=72>
<COL
style="WIDTH: 58pt; mso-width-source: userset; mso-width-alt: 2816"
width=77>
<COL
style="WIDTH: 52pt; mso-width-source: userset; mso-width-alt: 2523"
width=69>
<COL
style="DISPLAY: none; mso-width-source: userset; mso-width-alt: 2340"
span=2 width=0>
<COL
style="WIDTH: 68pt; mso-width-source: userset; mso-width-alt: 3291"
width=90>
<COL
style="DISPLAY: none; mso-width-source: userset; mso-width-alt: 2816"
width=0>
<COL
style="WIDTH: 61pt; mso-width-source: userset; mso-width-alt: 2962"
width=81>
<COL
style="WIDTH: 67pt; mso-width-source: userset; mso-width-alt: 3254"
width=89>
<COL
style="WIDTH: 35pt; mso-width-source: userset; mso-width-alt: 1718"
width=47>
<COL
style="WIDTH: 52pt; mso-width-source: userset; mso-width-alt: 2523"
width=69>
<COL
style="WIDTH: 78pt; mso-width-source: userset; mso-width-alt: 3803"
width=104>
<TD class=xl24 style="WIDTH: 84pt; HEIGHT: 12.75pt" width=112
height=17>
<A
name=RANGE!A101>Deal Details:
qqq
6
Stock Price
<TD class=xl49 style="BORDER-TOP: medium none" align=right
x:num="34.37">34.37
Deal Date
<A
name=RANGE!F102:F103>2/19/2002
<TD class=xl43
style="BORDER-RIGHT: red 1pt solid; mso-ignore: colspan"
align=middle colSpan=4>Strategy Comparison
<TD class=xl27 style="mso-ignore: colspan" colSpan=2
x:str="' Days to Expiry:"><SPAN
style="mso-spacerun: yes"> Days to
Expiry:
61
<TD class=xl24
style="WIDTH: 144pt; HEIGHT: 39pt; mso-ignore: colspan-rowspan"
width=192 colSpan=3 height=52 rowSpan=3><SPAN
style="mso-ignore: vglayout">
<IMG class=shape height=49
v:shapes="_x0000_s5193" v:dpi="96">
<IMG class=shape
height=51 alt="Cycle through time to Expiration"
v:shapes="_x0000_s5201" v:dpi="96">
Brokerage etc.
<A
name=RANGE!B103>(100)
Deal
Expiration
<A
name=RANGE!F103>4/19/2002
<TD class=xl27 style="mso-ignore: colspan" colSpan=2
x:str="' Analysis Date:"><SPAN
style="mso-spacerun: yes"> Analysis
Date:
<A
name=RANGE!P103>2/17/2002
Volatility
<TD class=xl28 style="BORDER-TOP: medium none" align=right
x:num="00.35">35.00%
Dividend
<SPAN
style="MARGIN-TOP: 14px; Z-INDEX: 6; MARGIN-LEFT: 84px; WIDTH: 169px; POSITION: absolute; HEIGHT: 26px; mso-ignore: vglayout"><IMG
class=shape height=26
v:shapes="_x0000_s5213" v:dpi="96"><SPAN
style="mso-ignore: vglayout2">
<TD class=xl24 style="WIDTH: 68pt; HEIGHT: 12.75pt" width=90
height=17>
Ex date
Price
Calculation Model:
<SPAN
style="MARGIN-TOP: 13px; Z-INDEX: 4; MARGIN-LEFT: 23px; WIDTH: 167px; POSITION: absolute; HEIGHT: 62px; mso-ignore: vglayout">
<IMG class=shape
height=26 alt="Clear (Red) Strategy"
v:shapes="_x0000_s5198" v:dpi="96">
<IMG class=shape height=26
alt="Reset days to maximum"
v:shapes="_x0000_s5194"
v:dpi="96"><SPAN
style="mso-ignore: vglayout2">
<TD class=xl24 style="WIDTH: 48pt; HEIGHT: 12.75pt" width=64
height=17>
Option Trades:
<TD class=xl85 style="BORDER-TOP: medium none; WIDTH: 52pt"
width=69>Action: Buy/Sell
Type
No.
Strike
Implied Volatility
Trade Expiry
<TD class=xl86 style="BORDER-TOP: medium none; WIDTH: 52pt"
width=69>Override Price
voltlty
Expiry
Days to Expiry
Price Used
Calculated Price
Initital Deb/Cred
Delta
Status
Option Trade 1
<A
name=RANGE!B108:H112>b
p
<TD class=xl63 style="BORDER-TOP: medium none" align=right
x:num="2000">2,000
<TD class=xl53 style="BORDER-TOP: medium none" align=right
x:num>34.00
<TD class=xl76 style="BORDER-TOP: medium none" align=right
x:num="37330">3/15/2002
1.3
35.0%
3/15/2002
24
1.3
0.9983
(2,600)
-0.42
Out' money
Option Trade 2
s
p
2,000
36.00
4/19/2002
2.95
35.0%
4/19/2002
59
2.95
2.7277
5,900
-0.59
In' money
<TD class=xl24
style="WIDTH: 144pt; HEIGHT: 25.5pt; mso-ignore: colspan-rowspan"
width=192 colSpan=3 height=34 rowSpan=2><SPAN
style="mso-ignore: vglayout">
<IMG class=shape height=26 alt="Reset days to minimum"
v:shapes="_x0000_s5196" v:dpi="96">
Option Trade 3
35.0%
4/19/2002
<TD class=xl24 style="COLOR: white; mso-ignore: style" align=right
x:num>9999
Option Trade 4
35.0%
4/19/2002
<TD class=xl24 style="COLOR: white; mso-ignore: style" align=right
x:num>9999
<TD class=xl24
style="WIDTH: 144pt; HEIGHT: 39pt; mso-ignore: colspan-rowspan"
width=192 colSpan=3 height=52 rowSpan=3><SPAN
style="mso-ignore: vglayout">
<IMG class=shape height=26 alt="Switch to table view"
v:shapes="_x0000_s5370" v:dpi="96">
Option Trade 5
35.0%
4/19/2002
<TD class=xl24 style="COLOR: white; mso-ignore: style" align=right
x:num>9999
3,300
Stock Trades:
Action: Buy/Sell
<TD class=xl40 style="WIDTH: 53pt" width=70
x:str="No. Shares"><SPAN
style="mso-spacerun: yes"> No. Shares
<SPAN
style="mso-spacerun: yes"> Price
<SPAN
style="MARGIN-TOP: 4px; Z-INDEX: 9; MARGIN-LEFT: 109px; WIDTH: 506px; POSITION: absolute; HEIGHT: 77px; mso-ignore: vglayout">
<SPAN
style="MARGIN-TOP: 12px; Z-INDEX: 12; MARGIN-LEFT: 11px; WIDTH: 134px; POSITION: absolute; HEIGHT: 31px; mso-ignore: vglayout"><IMG
class=shape height=31 alt="Absolute Price"
v:shapes="_x0000_s5346" v:dpi="96"><SPAN
style="MARGIN-TOP: 0px; Z-INDEX: 13; MARGIN-LEFT: 10px; WIDTH: 232px; POSITION: absolute; HEIGHT: 73px; mso-ignore: vglayout"><IMG
class=shape height=73 alt="Show stock price as "
v:shapes="_x0000_s5347" v:dpi="96"><SPAN
style="MARGIN-TOP: 43px; Z-INDEX: 14; MARGIN-LEFT: 11px; WIDTH: 212px; POSITION: absolute; HEIGHT: 24px; mso-ignore: vglayout"><IMG
class=shape height=24
alt="Percent Change from current price"
v:shapes="_x0000_s5348" v:dpi="96"><IMG height=77
v:shapes="_x0000_s5363 _x0000_s5344 _x0000_s5362">
<IMG class=shape height=30
alt="Include funding cost/revenue in P&L"
v:shapes="_x0000_s5342" v:dpi="96">
<SPAN
style="mso-ignore: vglayout2">
<TD class=xl27 style="WIDTH: 84pt; HEIGHT: 12.75pt" width=112
height=17>Stock Trade 1
<A
name=RANGE!B115:D116>
34.37
Stock Trade 2
34.37
34.37
<SPAN
style="MARGIN-TOP: 4px; MARGIN-LEFT: 8px; WIDTH: 998px; POSITION: absolute; HEIGHT: 366px; mso-ignore: vglayout"><IMG
class=shape height=366
v:shapes="_x0000_s5158" v:dpi="96"><SPAN
style="mso-ignore: vglayout2">
<TD class=xl24 style="WIDTH: 84pt; HEIGHT: 13.5pt" width=112
height=18>
<TD class=xl24
style="WIDTH: 174pt; HEIGHT: 51.75pt; mso-ignore: colspan-rowspan"
width=232 colSpan=3 height=69 rowSpan=4><SPAN
style="mso-ignore: vglayout">
<IMG class=shape height=47 alt="Switch to Main Screen"
v:shapes="_x0000_s5285" v:dpi="96">
<BLOCKQUOTE
style="PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
----- Original Message -----
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
<A title=MikeSuesserott@xxxxxxxxxxx
href="mailto:MikeSuesserott@xxxxxxxxxxx";>MikeSuesserott@xxxxxxxxxxx
To: <A
title=realtraders@xxxxxxxxxxxxxxx
href="mailto:realtraders@xxxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxxx
Sent: Tuesday, February 19, 2002 12:31
PM
Subject: [RT] Selling Covered
Calls
Ira,I am so glad to hear that you were able to
retire early (I was, too), andthat you believe you understand
options.Unfortunately, your analysis is still totally wrong. Ben's
original positionis indeed equivalent to a calendar spread, and
furthermore, risk is totallylimited here.To prove this, please
find attached two charts. The first one, ben.gif,shows Ben's position as
originally indicated by him. The second chart showsthe equivalent
calendar spread. If you were to superimpose them, you wouldfind them
exactly congruent.You may also notice that there is no unlimited
risk, and that the greatestprofit potential is to the
upside.Regards,Michael Suesserott>
-----Ursprungliche Nachricht-----> Von: Ira Tunik
[mailto:irat@xxxxxxxxx]> Gesendet: Tuesday, February 19, 2002
17:31> An: realtraders@xxxxxxxxxxxxxxx> Betreff: Re: [RT]
Selling Covered Calls>>> Reread what I wrote. I
didn't say he should fear anything. He> actually put on>
a collar of sorts for a credit. using the 34 puts and the 36>
calls to net a> profit. His maximum risk is 1 3/4 to the
downside with 2.40> income. net profit> at 0 on the stock is
2.40-1 3/4. On the upside he makes 1 point> on the stock> plus
the 2.40 in premium less the cost of the put. Having been a>
market maker,> trading my own account and able to retire 17 years
ago, I think I> understand> options. Ira>>
MikeSuesserott@xxxxxxxxxxx wrote:>> > Ira,>
>> > your argument is in error. In Ben's original position,
being> long 2000 QQQ,> > why should he fear that position
to go to 100?> >> > Even if the stock were called away
early, it would mean for Ben to have> > realized his profit
sooner, and to still own the long puts.> >> > The
equivalence of the two positions is a mathematical fact. Just do the>
> math or feed the positions into some option software, and you'll see
for> > yourself.> >> > Regards,>
>> > Michael Suesserott> >> > >
-----Ursprungliche Nachricht-----> > > Von: Ira Tunik
[mailto:irat@xxxxxxxxx]> > > Gesendet: Tuesday, February 19,
2002 16:53> > > An: realtraders@xxxxxxxxxxxxxxx> >
> Betreff: Re: [RT] Selling Covered Calls> > >> >
>> > > Wrong. You do not have a calander spread, you
have unlimited> > > risk. to the> > >
upside. The stock is the protection against the stock going to> >
> infinity. Look> > > at where you are with the stock
at 100 and then tell me you have> > > a time spread.>
> > Ira.> > >> > >
MikeSuesserott@xxxxxxxxxxx wrote:> > >> > > >
Ben,> > > >> > > > your position is
equivalent to a calendar spread> > > > buy 20 March 34
Puts> > > > sell 20 April 36 calls> > >
>> > > > You'd get the same risk/reward characteristics
without> having to tie up> > > > capital in the
purchase of the QQQ stock.> > > >> > > >
Regards,> > > >> > > > Michael
Suesserott> > > >> > > > >
-----Ursprungliche Nachricht-----> > > > > Von: profitok
[mailto:profitok@xxxxxxxxxxxxx]> > > > > Gesendet:
Tuesday, February 19, 2002 16:25> > > > > An:
realtraders@xxxxxxxxxxxxxxx> > > > > Betreff: Re: Re[2]:
[RT] Selling Covered Calls> > > > >> > >
> >> > > > > maybe an example will make everyone
happy> > > > >> > > > > buy 2000
qqq at 35> > > > > sell 20
April 36 calls at 2.4> > > > > buy 20
march 34 at .75> > > > > ----- Original
Message -----> > > > > From: "TheQuant"
<thequant@xxxxxxxxx>> > > > > To: "Daniel
Goncharoff" <realtraders@xxxxxxxxxxxxxxx>> > > > >
Sent: Monday, February 18, 2002 8:53 PM> > > > > Subject:
Re[2]: [RT] Selling Covered Calls> > > > >> >
> > >> > > > > > Hello Daniel,> >
> > > >> > > > > > Tuesday, February 19,
2002, 5:38:35 AM, you wrote:> > > > > >> >
> > > > DG> When was selling covered calls (which is indeed
similar> > > to selling> > > > > > DG>
puts) discussed?> > > > > >> > > >
> > I went back and re-read his post you are correct. However I
have> > > > > > trouble understanding the
method. He sells calls, then> understands> > >
> > > the risk so he sells tons of puts. Did he also have
tons> > > of calls or> > > > > > a half a
ton of calls. I think he has been lucky for 7 months?> >
> > > > What's the exact method or is it seat of the
pants?> > > Besides that Ric> > > > > >
brings up some very interesting points about the whole> > >
thing and read> > > > > > Tom Bowen's most recent
post. Especially the part> about the audited> > >
> > > (independently)track record. If I only had a nickle
for> > > every bright> > > > > > star
that has claimed to have made "Tons of Money" trading.> > >
> > >> > > > > > DG> I thought Ben was
talking about a strategy that was> more like a> > > >
> > DG> collar, if I understood it correctly. It seems to>
me that Ben's> > > > > > DG> strategy is based on
differences between real price> > > movements and> >
> > > > DG> the pricing of options, which is usually done
on> the basis of> > > > > > DG>
probabilistic models. Whether you believe it works> or not,
his> > > > > > DG> downside is limited, which makes
it look a lot> different than a> > > > > >
DG> naked short put -- more like a bull put spread.> > >
> > >> > > > > > Bunk his downside is
limited!, the way the post reads he> > > had more puts>
> > > > > bought "Tons" then calls. Either way he could have
lost on> > > the trade,> > > > > >
contrary his broker is smiling.> > > > > >>
> > > > > DG> Regards> > > > > >
DG> DanG> > > > > >> > > > >
> What Ric writes below is an eye opener! He is> absolutely
correct!> > > > > > People can get crazy I tell you
trying to avoid risk but rather> > > > > > causing
self fulfilled prophecy of doom upon themselves!> > > > >
>> > > > > > DG> ric ingram wrote:> >
> > > > >>> > > > > > >>
Hi,> > > > > > >>> > > > >
> >> But some people have a real perception problem - and
do> > > not know it.> > > > > >
>>> > > > > > >> It is only reasonable to
point out that given that you> > > intend to hold> >
> > > the> > > > > > >> underlying,
selling a covered call actually reduces your> > > > >
exposure to a> > > > > big> > > > >
> >> fall. So if you were going to hold the
underlying> > > anyway, selling> > > > >
covered> > > > > > >> calls can be considered a
conservative strategy.> > > > > > >>>
> > > > > >> However if you do not hold the underlying
or do hold it> > > but do not> > > > >
intend> > > > > > >> to keep it, buying the
underlying and selling a covered> > > call is the> >
> > > same as> > > > > > >> selling a
naked put.> > > > > > >>> > > >
> > >> Paradoxically, selling naked puts is actually lower
risk> > > than holding> > > > > the>
> > > > > >> underlying if you allocate the same
capital as you would> > > > > have done for> >
> > > > >> holding the underlying.> > > >
> > >>> > > > > > >> But rationality
is rarely a bedfellow with fear or greed.> > > > > >
>>> > > > > > >> Unconditionally yours,
Ric.> > > > > > >> www.traderscalm.com>
> > > > >> > > > > >> > >
> > > --> > > > > > Best regards,>
> > > > >
TheQuant
mailto:thequant@xxxxxxxxx> > > > > >> > >
> > >> > > > > >> > > > >
> To unsubscribe from this group, send an email to:> > >
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> > >> > > > > >> > > > >
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