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The attached is what cones are really all about -- option trading.
Here, on expiry date we calculate a new probability cone based on the
standard deviation of price at that time and the probability value
we wish to use to select the strike prices for the credit spread of
selling a call option and a put option at the strike indicated as being
"safe" on the next expiry.
This is not anything new and is well known by most option traders.
This is just to give those without this exposure some idea of how
it is possible to make relatively safe trades by selling puts and calls.
Remember, NOT GUARANTEED. There is risk (as the died in the wool
option traders will tell you) but this is an approach that will allow you
to lower your risk and indicate to you when you should "bail out" of
a trade.
An earlier version of this software (free) is at:
http://groups.yahoo.com/group/swingmachine/files/OMEGA_ELA-ELS_FOLDER/probra
ng.ela
Much credit for getting me interested in this goes to BobR.
Clyde
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Clyde Lee Chairman/CEO (Home of SwingMachine)
SYTECH Corporation email: clydelee@xxxxxxxxxxxx
7910 Westglen, Suite 105 Office: (713) 783-9540
Houston, TX 77063 Fax: (713) 783-1092
Details at: www.theswingmachine.com
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