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I am throwing myself into this to see if there is a mechanical way to do
determine the best strike prices to use to sell a Put and sell a Call
against a current price.
>From statistical definitions, it can be stated that:
1. If option prices [selling a put and a call] are one standard deviation
from the current price, then there is a 32% chance the strike price will
be hit.
2. If option prices are two standard deviations from the current price,
then there is only a 5% to 10% chance the strike price will be hit.
3. If option prices are three standard deviations from the current price,
then there is only a 0.3% chance the strike price will be hit.
I am rusty on my statistics...so any help in doing the calculations would
be appreciated. Hopefully, one based on an example...let's say the closing
price of ECZ03 or 1.1482.
Sincerely,
John
Dear Dale,
I know how you feel...but we are at an awkward spot. I will send you a
chart. Today was a 0.5 or 50% retracement of the slide and we hit the
warning line today. I printed the chart and we need a 0.618 or 61.8 %
retracement past the warning line to hit 1.1521 approximately.
Let's talk and make the decision in the AM.
Greed is good but also can turn a breakeven into a loser.
Sincerely,
John
> john
>
> i am feeling a little bit of greed coming on and i think we should
> cancel the 109 option buy back and go fo a win ? the market has
> dropped 400pts since ive been in and im down a couple hundred bucks i
> think for what we have been through a small move up here turns a
> profit
>
>
>
> dale
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