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Hello IRA
I always close the long put the day BEFORE expiration and replace it with
next month same strike price
(do not forget qqq strike prices are only one dollar apart)
both orders are entered at 350 est and 355 est so no possible no fill(at
market,,)
qqq option are so liquid bid and ask are mostly 10 cents apart
I also NEVER get called away as I am always selling 2 month out
the assignment is ALWAYS the front month
and on expiration day I replace the next month option with 2 month out
any questions?
nice evening
Ben
----- Original Message -----
From: "Ira Tunik" <irat@xxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Tuesday, February 19, 2002 5:09 PM
Subject: Re: [RT] Selling Covered Calls
> I am sorry that we disagree, but there is risk in his postions. The
assumption
> is that he can roll, or that he is deep in the money on one side or
another.
> What happens when the put expires and price is between the strikes, now he
is
> exposed. What happens if the call is exercised? There are a lot of what
ifs
> in the position. As for the put spread equivilant, your chart shows one
thing,
> but if my thinking hasn't gone all bad on me, then the maximum value that
a time
> spread has is at the strike price and the spread collapses as price moves
away
> from the strike price. By the way a time spread is one in which both the
long
> and short are at the same strike price. I don't believe, that your
example used
> the same strike prices, therefore, not a time spread. The principle of a
time
> spread is to sell it at the strike and buy it as it moves towards the
strike.
> Now our terminology may be mixed, but those are my thoughts on the matter.
Ira.
>
> MikeSuesserott@xxxxxxxxxxx wrote:
>
> > Ira,
> >
> > please look at the chart "ben.gif" that I sent previously. Now read the
> > caption. It says,
> >
> > Long 2000 QQQ
> > Short 20 Apr 36 Calls
> > Long 20 Mar 34 Puts.
> >
> > Isn't this exactly what you just confirmed Ben wrote? "Ben is long puts
and
> > short calls and long stock," you said. So the chart "ben.gif" depicts
Ben's
> > position. Is this understood? Are we agreed? OK so far? Can you live
with
> > that? :-)
> >
> > Now when you look at that chart, you see that this position has no
unlimited
> > risk anywhere. Can you see that? Risk is limited to about -$2,700.
That's
> > the lowest P/L level that curve will reach during the lifetime of the
> > position. You see that?
> >
> > So we have now established that there is no unlimited risk in Ben's
> > position, in contrast to what you promulgated here.
> >
> > Next. My point was that Ben could have established an equivalent
position by
> > doing a calendar spread. So what I am saying is that the long puts/short
> > puts calendar spread shown in the second chart looks exactly the same
and
> > has the same risk/reward characteristics as Ben's original position.
> >
> > The blue curve in the first chart shows Ben's position.
> > The red curve in the second chart shows a calendar spread position.
> > I said these two are equivalent, meaning, "blue curve is same as red
curve."
> >
> > The charts prove that this is so.
> >
> > Regards,
> >
> > Michael Suesserott
> >
> > > -----Ursprungliche Nachricht-----
> > > Von: Ira Tunik [mailto:irat@xxxxxxxxx]
> > > Gesendet: Tuesday, February 19, 2002 21:30
> > > An: realtraders@xxxxxxxxxxxxxxx
> > > Betreff: Re: [RT] Selling Covered Calls
> > >
> > >
> > > Once again you have the wrong information. Ben is long puts and
> > > short calls and
> > > long stock. Definitely not long puts and short puts. Check your
> > > input again.
> > > Put in long 35 puts and shourt 36 calls and see what you chart
> > > shows you. Ira
> > >
> > > MikeSuesserott@xxxxxxxxxxx wrote:
> > >
> > > > Ira,
> > > >
> > > > I am so glad to hear that you were able to retire early (I was,
> > > too), and
> > > > that you believe you understand options.
> > > >
> > > > Unfortunately, your analysis is still totally wrong. Ben's
> > > original position
> > > > is indeed equivalent to a calendar spread, and furthermore,
> > > risk is totally
> > > > limited 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 shows
> > > > the equivalent calendar spread. If you were to superimpose
> > > them, you would
> > > > find them exactly congruent.
> > > >
> > > > You may also notice that there is no unlimited risk, and that
> > > the greatest
> > > > profit 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.
> >
> >
> > To unsubscribe from this group, send an email to:
> > realtraders-unsubscribe@xxxxxxxxxxxxxxx
> >
> >
> >
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http://docs.yahoo.com/info/terms/
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