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Or better yet. Average down then write OTM calls for a profit.
Example: bought 100 QQQ @ 50 and now buy 500 at 30. This is 600
shares with an average of 33.33. Sell the 34 or 35 calls for a
profit.
If you believe a bull market is here, then buy some more the price is
low enough.
Dominick
--- In realtraders@xxxx, "Lee Morris" <LMorris@xxxx> wrote:
> maybe I am too simplistic but why not sell the qqq's take the tax
loss and
> buy current ATM or OTM calls (assuming you are bullish) which I do
not think
> would be considered a wash sale, you could also do it with a rydex
index
> fund. This would give you a 30% of the loss return from the tax loss
and
> keep you where you are if the qqq rebound while at the same time it
limits
> your downside. Even if the qqq are not in a taxable account this
would be
> safer then holding the qqq assuming you buy enough time. just
another
> thought some with more complex option experience may see holes in
this.
> -----Original Message-----
> From: Dom Perrino [mailto:domenick@x...]
> Sent: Friday, May 10, 2002 1:03 PM
> To: realtraders@xxxx
> Subject: Re: [RT] qqq
>
>
> 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
>
> ----- Original Message -----
> From: M. Simms
> To: realtraders@xxxx
> 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.
>
> 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".
> -----Original Message-----
> From: Dom Perrino [mailto:domenick@x...]
> Sent: Friday, May 10, 2002 7:57 AM
> To: realtraders@xxxx
> Subject: Re: [RT] qqq
>
>
> For the record, the below was written by JAC. I responded to
it.
> Cheers,
>
> ----- Original Message -----
> From: Ira Tunik
> To: realtraders@xxxx
> 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:
>
> ----- Original Message -----
> From: JAC1390@xxxx
> To: realtraders@xxxx
> 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
> selling position. In other words if position gets
close to
> getting
> called away I want to maintain position rather than
realize
> loss. Pie
> in the sky thinking?
>
>
>
>
>
>
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