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Didn't your diagram simply the situation a bit, since the put and call
have different expiry months? Specifically, the short call will have
time value, and therefore cost more to buy back, when the put has
expired.
Regards
DanG
> Ray Raffurty wrote:
>
> Hi Neal,
>
> Not to put words in Ben's mouth, but what he is doing is purchasing
> LEAPS (long tern options) on the QQQ, LRIAI (he typed IRIAI by mistake
> I believe) is a Jan 2004 35 call. He owns 175 of then, currently @
> 6.7. He then sells calls against these leaps for income. The QQQEJ
> is a May 2002 36 call. He originally sold 175 of these and recently
> bought them back for a profit of $21075. At the same time he
> purchases Puts at a lower strike and a nearer month than the calls he
> sells. He originally purchased 175 QAVPH April 2002 34 Puts and just
> sold then for a loss of $1250. His net profit was 21075 - 12500 =
> $8575. He still owns the 175 LRIAI LEAPS
>
> If I read him correctly, he has established a new position by selling
> 175 QQQFJ (June 2002 36 call) for a credit of $28875 and purchased
> protection in the form of 175 QAVQH May 2002 34 Puts (I believe he
> mistyped it as QAVGH, a July 34 Call which is not trading now) for a
> debit of $21875.
>
> Subsuming the QQQ's for the IRIAI LEAPS (my preference for this trade)
> you get a favorable 3 to 1 risk to reward ratio as shown in the
> attachment
>
> Good luck and good trading,
>
> Ray Raffurty
>
>
> ----- Original Message -----
> From: Neal Chabot
> To: realtraders@xxxxxxxxxxxxxxx
> Sent: Thursday, April 04, 2002 11:29 PM
> Subject: Re: [RT] Re: option update
>
> Ben,
> if you just say what the month and strike price are
> instead of the codes, it would be easier for most of us
> to decipher what you are doing.
> Neal
>
> ----- Original Message -----
> From: profitok
> To: realtraders@xxxxxxxxxxxxxxx
> Cc: gannsghost@xxxxxxxxxxxxxxx
> Sent: Thursday, April 04, 2002 7:28 PM
> Subject: Re: [RT] Re: option update
>
> Now that I have time let me finish
> the closing of the long 175 qavph resulted in a
> LOSS of $12500
> selling 175 qqqfj result in income of $30625
> and
> buying protection again 175 qavqh cost $21000
> current value
> 175 IRIAI is $120750
> 175 short qqqfj is worth $28875
> and long qavgh is worth $21875
> on the closed positions we are ahead $8575 in 4
> week for a $133000 investment
>
> ----- Original Message -----
> From: profitok
> To: realtraders@xxxxxxxxxxxxxxx
> Cc: gannsghost@xxxxxxxxxxxxxxx
> Sent: Wednesday, April 03, 2002 10:11 AM
> Subject: [RT] Re: option update
>
> just to let you know
> we got filled on the buy to close 175
> qqqej at 1.75
> net profit $21075
> next
> we are selling qavph
> order to sell at.75
>
> ----- Original Message -----
> From: profitok
> To:
> realtraders@xxxxxxxxxxxxxxx
> Cc: gannsghost@xxxxxxxxxxxxxxx
> Sent: Monday, March 25, 2002
> 10:03 PM
> Subject: option update
>
> current value
>
> remember purchasing 130000
> of options in the last 4
> weeks
> here is the update as of today
> close
>
> here is the update as of today
> close
> long 175 IRIAI total
> cost $144000 current value
> $$133000
> long 175 QAVPH cost
> $25625 current value $ 11375
> short 175 QQQEJ sold
> $44875 current profit
> $16000
> have order to buy back to
> close@ 1.35(qqqej)
>
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> Name: QQQ1.jpg
> QQQ1.jpg Type: JPEG Image (image/jpeg)
> Encoding: base64
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