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Hi Dan,
That is true since, as you pointed out, if you
wanted to close out the position at the expiration of the long Puts there would
be still be one month time value in the short calls. At expiration of
the put one would need to make a decision based on you opinion of the
market at that time and either roll the entire position, convert it to a spread
by buying the same month put, or keep it as a covered call without the
put. This chart plots the latter, so you would have greater risk during
the second month.
If the QQQ's where up, I would replace the put for
a small fraction. If they where nearly unchanged I would roll it and if
they where down I would probably replace the position at a lower strike,
provided it was not so low as to lock in a loss. If it crashed I would
exercise the put and take a small loss.
Actually, after I looked at the trade more
thoroughly, I probably would not have entered in to it at the time I created the
chart. I would have preferred to enter when the QQQ's closer to the short
36 call strike, say at 35.50 or greater, rather than when the
QQQ's where at 34.41, closer to the long Put's
34 strike. This way the position would be entered for a credit vs. a
debit.
Thanks and good luck and good trading,
Ray Raffurty
----- Original Message -----
<BLOCKQUOTE
style="PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
Daniel
Goncharoff
To: <A title=realtraders@xxxxxxxxxxxxxxx
href="mailto:realtraders@xxxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxxx
Sent: Friday, April 05, 2002 1:19
PM
Subject: Re: [RT] Re: option update
Didn't your diagram simply the situation a bit, since the
put and callhave different expiry months? Specifically, the short call
will havetime value, and therefore cost more to buy back, when the put
hasexpired.RegardsDanG> 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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