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Thanks Ira,
I think I get it now.
John
------------------ Reply Separator --------------------
Originally From: "ira" <mr.ira@xxxxxxxxxxxxx>
Subject: Re: [RT] Interesting Puts
Date: 09/26/2002 07:35am
If you sell the 25 put you buy the 20 put or the 17 1/2 put that
limits the
risk. Not only is the risk reduced, so is the margin requirement.
The
profit is also reduced, but then again you can sell more spreads for
the
same margin as one naked option and net the same amount of money.
The key
is the risk. At $20 you know what your risk is. It is $20 less the
option
premium taken in. If you can afford to buy the stock you can afford
the
loss on the option. If you feel that you want to own the stock then
why not
buy a 2 year leap and just trade the stock short against the leap.
Each time
you get a sell signal, short the stock. When you cover the short
stock you
are automatically long with the leap. You can adjust your deltas any
way
you would like. The nice thing is that you are always in a position
of
limited, defined risk.
----- Original Message -----
From: "John Cappello" <jvc689@xxxxxxx>
To: "M. Simms" <prosys@xxxxxxxxxxxxxxxx>;
<realtraders@xxxxxxxxxxxxxxx>
Sent: Wednesday, September 25, 2002 8:33 PM
Subject: [RT] Interesting Puts
>
> For my own and possibly others, how does one convert the sale of a
> put to a credit spread.
>
> John
>
>
> ------------------ Reply Separator --------------------
> Originally From: "M. Simms" <prosys@xxxxxxxxxxxxxxxx>
> Subject: RE: [RT] Interesting Puts
> Date: 09/25/2002 11:14pm
>
>
> All you have to do is convert the naked position to a credit spread
> position.....
> it's easy.
> but greedy people (like Vic Niederhoffer) don't do it....it reduces
> profits.
>
>
> > -----Original Message-----
> > From: ira [mailto:mr.ira@xxxxxxxxxxxxx]
> > Sent: Wednesday, September 25, 2002 8:14 PM
> > To: realtraders@xxxxxxxxxxxxxxx
> > Subject: Re: [RT] Interesting Puts
> >
> >
> > Selling naked options can be very risky. There are many other
> > ways to trade
> > with the same or better profit potential and have limited risk.
> > As a market
> > maker and as a trader, I have always abided by one rule. " Never
> be short
> > more options then you are long" That rule stood me in good stead
> until I
> > retired and in the 18 years thereafter. Ira
> > ----- Original Message -----
> > From: "John Cappello" <jvc689@xxxxxxx>
> > To: <realtraders@xxxxxxxxxxxxxxx>
> > Cc: <MedianLine@xxxxxxxxxxxxxxx>
> > Sent: Wednesday, September 25, 2002 12:44 PM
> > Subject: [RT] Interesting Puts
> >
> >
> > >
> > > Yesterday I sold Dec. puts on GE with a strike price of 22.50.
> Nice
> > > premium.
> > >
> > > Today, before market rise I sold Dec. puts on JPM with a strike
> price
> > > of 15.00. Nice premium.
> > >
> > > My concept is that if the strike prices were hit I would not
mind
> > > owning the stocks at those prices. If not struck I keep the
> premium.
> > >
> > > I had previously sold Sept calls on GE with a strike price of
> 35.00.
> > > Premium became mine when options expired.
> > >
> > > I am looking for other ideas that have value along these lines.
> > >
> > > John
> > >
> > >
> > > To unsubscribe from this group, send an email to:
> > > realtraders-unsubscribe@xxxxxxxxxxxxxxx
> > >
> > >
> > >
> > > Your use of Yahoo! Groups is subject to
> http://docs.yahoo.com/info/terms/
> >
> >
>
>
>
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