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You are right, Options can go from the simple to
the very complex, especially when one tries to repair a heavy paper loss via
various option strategies. One has to consider all possible outcomes and the
evaluate the risk/reward ratio. In Jac,s case he is long qqq,s. He also appears
to be bullish . Writing out of the money covered calls and buying them back(at a
loss) as they approach call price and selling the next cycle of covered
calls would enable him not to loose his position. This would not entail any
great risk. At the same time he could wait for sharp rallies to sell the calls.
(The disadvantage of the leaps is that they don't move as sharply during a sharp
rally).If the market moves up he would most likely be gaining more on the qqq
position than the losses incurred in covering the calls on the rollovers.
If the market goes down he has some income to offst some of his losses as the
qqq goes further down. If my calculation is correct the NDX would have to go to
2000 just to break even on his qqq,s.
Best Regards,
Dom
<FONT face=Arial
size=2>.
----- Original Message -----
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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:
M.
Simms
To: <A title=realtraders@xxxxxxxxxxxxxxx
href="mailto:realtraders@xxxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxxx
Sent: Friday, May 10, 2002 11:54 AM
Subject: RE: [RT] qqq
Well said
Dom.....BUT it is really important to understand that many option strategies
have "built in" stops......
so being down
20 pts is pretty meaningless from a money management standpoint UNLESS you
have SOLD NAKED CALLS or something like that long or short stangles come to
mind....where there is massive exposure to loss.
<FONT color=#0000ff
size=2>
Other strats
like bull/bear spreads have auto-stops...same for butterflys and
condors.
This does not
mean it would be judicious to retain the loss position for these.....it all
"depends".
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<FONT face=Tahoma
size=2>-----Original Message-----From: Dom Perrino
[mailto:domenick@xxxxxxxxxxxx]Sent: Friday, May 10, 2002 7:57
AMTo: realtraders@xxxxxxxxxxxxxxxSubject: Re: [RT]
qqq
For the record, the below was written by JAC. I
responded to it.
Cheers,
<FONT face=Arial
size=2>Dom
----- Original Message -----
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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:
Ira Tunik
To: <A
title=realtraders@xxxxxxxxxxxxxxx
href="mailto:realtraders@xxxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxxx
Sent: Thursday, May 09, 2002 9:28
PM
Subject: Re: [RT] qqq
If you want to hold on to the QQQ because you don't want to
take a loss, that is the wrong reason. The first loss is the best
loss. If you are looking for a way to correct a trading error by
compounding it with a strategy you don't understand, you are making a
greater error. There are many option strategies that will satisfy
your need because you want to hold onto the QQQ. The other mistake,
I believe, that is being made here is that it appears you are looking for
an option to expire worthless to put money in your account. Also the
wrong attitude. Options were meant to be traded or used as a safety
net. There are other uses for options but that gets into the
sophisticated area of options. Before you try to save yourself with
option time premium erosion call the CBOE and get all the free information
that they have on options. It is extensive and some of the
best options material available at any price. Hope that things work
out for you. Ira.
Dom Perrino wrote:
<BLOCKQUOTE dir=ltr
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----- Original Message -----
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
<A title=JAC1390@xxxxxxx
href="mailto:JAC1390@xxxxxxx";>JAC1390@xxxxxxx
To: <A
title=realtraders@xxxxxxxxxxxxxxx
href="mailto:realtraders@xxxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxxx
Sent: Thursday, May 09, 2002
8:06 PM
Subject: Re: [RT]
qqq I am holding a
position in QQQ's down 20 points. Can anyone recommend
a strategy for writing options on
position with the intent of not <FONT
face=Arial>selling position. In other words if
position gets close to getting <FONT
face=Arial>called away I want to maintain position
rather than realize loss. Pie <FONT
face=Arial>in the sky thinking?
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