Sunday, May 31, 2009

[ConservativeOptionStrategies] Re: if I sell a put and a call at the money



--- In ConservativeOptionStrategies@yahoogroups.com, "paul7313" <paul7313@...> wrote:
>
> and the market goes up. how do I profit?
>
> or is it better to buy a call and a put ATM? How do I profit?
>
IF YOU SELL A (CASH COVERED) PUT ATM AND THE STOCK GOES UP YOU WILL PROFIT THE AMT OF THE PREMIUM. IF THE STOCK GOES BELOW YOUR STRIKE PRICE AT EXPIRATION YOU HAVE TO BUY IT AT THE STRIKE PRICE, BUT YOU STILL MAKE THE PREMIUM. I WILL ONLY SELL A PUT IF I WANT TO OWN THE STOCK AT THE LOWER PRICE. FOR EXAMPLE XYZ IS $30 AND YOU SELL A PUT ATM AND THE PREMIUM IS $2 , YOUR COST WOULD BE $28 (NET COST.) AND YOU WOULD THEN OWN THE STOCK AND COULD SELL OPTIONS ON IT THE NEXT MONTH. IF YOU BUT A CALL ATM (PROBABLY EXPENSIVE PREMIUM) AN THE STOCK GOES UP YOU ALSO MAKE MONEY, BUT IF IT GOES BELOW YOUR ATM CALL, YOU LOSE WHATEVER YOUR PAID FOR YOUR CALL. A COVERED CALL IS FIRST BUYING THE STOCK AND THEN SELL A CALL AGAINST IT. IF THE PRICE OF THE STOCK GOES HIGHER THAN YOUR STRIKE PRICE YOU KEEP THE PREMIUM BUT ARE ASSIGNED ON THE STOCK (YOU HAVE TO SELL THE STOCK FOR THE STRIKE PRICE) BUT KEEP THE PREMIUM ON THE CALL YOU SOLD. I WOULD SUGGEST THAT YOU BUY A BOOK BY ALAN ELLMAN "COVERED CALLS" IT IS AVAIL ON AMAZON FOR ABOUT $20 AND IS AS GREAT INVESTMENT IF YOU ARE INTERESTED IN SELLING CALLS. 80% OF OPTIONSTHAT ARE BOUGHT EXPIRE AT EXPIRATION, SO MY FOCUS IS SELLING COVERED CALLS OR SELLING CASH COVERED PUTS.( A CASH COVERED PUT MEANS THAT MOMEY IN YOUR ACCOUNT IS HELD IN SORT OF ESCROW UNTIL EXPIRATION TO COVER THE COST IF YOU ARE ASSIGNED AND HAVE TO BUY THE STOCK.) YOU WILL HAVE TO SIGN UP WITH YOUR BROKERAGE FIRM TO GET PERMISSION TO SELL PUTS, BUT YOU CAN SELL COVERED CALLS IN YOUR RETIREMENT ACCOUNT. HOPE THIS HELPS. BOB

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[TheOptionClub.com] Morphing



Hello everybody I was wondering if anybody knows how to  morph calls and puts as stock replacement strategies. I have watch an video on morphing a long call using an ABC   pattern. For example stock is at $45  and you buy an 40 call@10 that has 80 delta, when the stock goes to $50  you roll the 40 to the 45 strike@5 when the delta reaches 80 locking in a credit. This is a vertical roll using the same month and buying 2-4 months out a long call in the money. If the stock keeps going up you keep rolling the long option up to the next strike locking in profits. This is suppose to give you limited risk and unlimited profit potential on the upside. If it begins to fall or at an resistance point buy an 100 delta put turning your long call into  an synthetic put on a one to one basis. Has anybody tried this strategy.


__._,_.___
The goal of TheOptionClub is to provide a forum for members to work together for the purpose of furthering our individual understanding option trading.  All messages and postings, and any materials circulated are provided for discussion and educational purposes only.  No statement contained in any materials from TheOptionClub should be considered a recommendation to buy or sell a security or to provide investment, legal or tax advice.  All investors are encouraged to consult a qualified professional before trading in any security.  Stock and option trading involves risk and is not suitable for most people.  There is no guarantee that any information provided is accurate and, may in fact, be wrong.  It is understood that the participants in TheOptionClub have varying backgrounds and degrees of experience in option trading, and that regardless of experience each member is considered a student.  As such, any information distributed through TheOptionClub should be considered with a critical mind and not relied upon as an authoritative source.

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[TheOptionClub.com] Tennessee/Elongated/Turbo/Ratioed Butterfly



I just finished Saliba's excellent new options book on directionless market trading. He mentions a few butterfly combinations he worked on with Cottle back in the day. No real detail was given, and I've yet to find any info on the net. I've listed the four below and would appreciate any info. Thanks

Tennessee, Elongated, Turbo, Ratioed

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The goal of TheOptionClub is to provide a forum for members to work together for the purpose of furthering our individual understanding option trading.  All messages and postings, and any materials circulated are provided for discussion and educational purposes only.  No statement contained in any materials from TheOptionClub should be considered a recommendation to buy or sell a security or to provide investment, legal or tax advice.  All investors are encouraged to consult a qualified professional before trading in any security.  Stock and option trading involves risk and is not suitable for most people.  There is no guarantee that any information provided is accurate and, may in fact, be wrong.  It is understood that the participants in TheOptionClub have varying backgrounds and degrees of experience in option trading, and that regardless of experience each member is considered a student.  As such, any information distributed through TheOptionClub should be considered with a critical mind and not relied upon as an authoritative source.

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[ConservativeOptionStrategies] Re: Covered Calls

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[ConservativeOptionStrategies] Re: if I sell a put and a call at the money



--- In ConservativeOptionStrategies@yahoogroups.com, "paul7313" <paul7313@...> wrote:
>
> and the market goes up. how do I profit?
>
> or is it better to buy a call and a put ATM? How do I profit?
>
BUY 500 SHARES AT $9.00 ($4500)
> SELL 5 CALLS AT .75 GET $375
> SELL 5 PUTS AT .75 GET $375
> IF AT EXPIRATION: STOCK OVER 9.00
> STOCKS GET ASSIGNED AT 9.00
> YOU GET 4500 FOR STOCK AND 750 FOR OPTION PREMIUMS
> PROFIT 750 MINUS COMM.
> ........
> STOCK BELOW 9 AT EXPIRY
> YOU STILL OWN 500 SHARES
> YOU MUST BUY 500 MORE AT 9.00
> YOU NOW OWN 1000 @9.00 PLUS KEEP 750 FOR PREMIUMS ON THE OPTIONS
> .................

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re: [TheOptionClub.com] Re: Stangle on Rimm



I never as a rule not buying long options with less then 45-90 days.
I do need movement and to belive that the stock can gain intrinsic value as the debit that I am paying.
But regarding to Vega/theta what is this ratio tells me?

Nava   








From: "karensoich" <mcatolico@mindspring.com>
Sent: Sunday, May 31, 2009 5:31 AM
To: OptionClub@yahoogroups.com
Subject: [TheOptionClub.com] Re: Stangle on Rimm

if you are doing this as an earnings play i would suggest you trade the month the earnings come out. if you believe that whatever happens after earnings will start a trend that you want to be in, i would wait until earnings are announced and then pounce on the direction you want to lean the trade with a vertical or other directional strategy.

you ask about the greeks. well the obvious risk is vega/theta. whatever happens after earnings are released, rimm iv will likely fall - particularly in those july or sep options - and thus you have to get enough big directional movement to compensate for the debit on the strangle (especially if you decide to play june expiration, as i suggest, which would expire immediately after earnings). so you have to be prepared to either have your fortune telling skills perfect (i.e. you guess correctly on a big post earnings move) or you have to be an aggressive seller of premium on pre-earnings opportunities or directly into any post earnings move.

--- In OptionClub@yahoogroups.com, "nava_elgar" <nava@...> wrote:
>
> Hello all,
>
> I am considering a trade on RIMM b4 earning .
> Rimm has earning June 18.
>
> I thought about on 80/75 Sep cost 16.75$ debit or to go on July same strike cost 11.15$ .
>
> my question:
>
> I don't look at greek so all the greek export here what do you think?
> I want to learn.
>
>
> when I am placing this kind of trade .I am just checking if the stock can move that far to make me profit.
>
> Nava Elgar
>

__._,_.___
The goal of TheOptionClub is to provide a forum for members to work together for the purpose of furthering our individual understanding option trading.  All messages and postings, and any materials circulated are provided for discussion and educational purposes only.  No statement contained in any materials from TheOptionClub should be considered a recommendation to buy or sell a security or to provide investment, legal or tax advice.  All investors are encouraged to consult a qualified professional before trading in any security.  Stock and option trading involves risk and is not suitable for most people.  There is no guarantee that any information provided is accurate and, may in fact, be wrong.  It is understood that the participants in TheOptionClub have varying backgrounds and degrees of experience in option trading, and that regardless of experience each member is considered a student.  As such, any information distributed through TheOptionClub should be considered with a critical mind and not relied upon as an authoritative source.

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[TheOptionClub.com] Re: Stangle on Rimm



if you are doing this as an earnings play i would suggest you trade the month the earnings come out. if you believe that whatever happens after earnings will start a trend that you want to be in, i would wait until earnings are announced and then pounce on the direction you want to lean the trade with a vertical or other directional strategy.

you ask about the greeks. well the obvious risk is vega/theta. whatever happens after earnings are released, rimm iv will likely fall - particularly in those july or sep options - and thus you have to get enough big directional movement to compensate for the debit on the strangle (especially if you decide to play june expiration, as i suggest, which would expire immediately after earnings). so you have to be prepared to either have your fortune telling skills perfect (i.e. you guess correctly on a big post earnings move) or you have to be an aggressive seller of premium on pre-earnings opportunities or directly into any post earnings move.

--- In OptionClub@yahoogroups.com, "nava_elgar" <nava@...> wrote:
>
> Hello all,
>
> I am considering a trade on RIMM b4 earning .
> Rimm has earning June 18.
>
> I thought about on 80/75 Sep cost 16.75$ debit or to go on July same strike cost 11.15$ .
>
> my question:
>
> I don't look at greek so all the greek export here what do you think?
> I want to learn.
>
>
> when I am placing this kind of trade .I am just checking if the stock can move that far to make me profit.
>
> Nava Elgar
>

__._,_.___
The goal of TheOptionClub is to provide a forum for members to work together for the purpose of furthering our individual understanding option trading.  All messages and postings, and any materials circulated are provided for discussion and educational purposes only.  No statement contained in any materials from TheOptionClub should be considered a recommendation to buy or sell a security or to provide investment, legal or tax advice.  All investors are encouraged to consult a qualified professional before trading in any security.  Stock and option trading involves risk and is not suitable for most people.  There is no guarantee that any information provided is accurate and, may in fact, be wrong.  It is understood that the participants in TheOptionClub have varying backgrounds and degrees of experience in option trading, and that regardless of experience each member is considered a student.  As such, any information distributed through TheOptionClub should be considered with a critical mind and not relied upon as an authoritative source.

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[TheOptionClub.com] Re: advance adjustments



> Does anybody know how to do these adjustments, if so please show
simulations in TOS.
>
> 1. BUTTERFLY ROLL
> 2. ASYMMETRICAL BUTTERFLY ROLL
> 3. ASYMMETRICAL BUTTERFLY RATIO ROLL
> [you get the idea]

Isn't this exactly like one of those "Do my homework for me!" questions
that you see on technical forums all the time? Right...

In this context, though, I get the distinct sense that this list comes
from the marketing material for some sort of seminar or course, and that
the writer is curious but doesn't want to spend thousands to learn the
magic.

If so, he's probably on the right track. A mess of jargon like this
sounds to me like someone's trying to dress up some standard options
theory and charge a bundle for teaching you the exclusive, hidden
secrets previously known only to insiders.

Sure, people in this business love to give flashy names to their trades:
straddles, strangles, butterflies, iron condors -- I've even heard of
"centipedes" and "pterodactyls", for crying out loud. And a certain
amount of terminology is useful: it's easier and clearer to say, "I sold
an iron condor" than "I sold a call spread and a put spread with the
same underlying and the same expiration". But someone's really getting
carried away here. Who on earth would say, "Oh, the price of XYZ has
moved up; now I need to do an asymmetrical butterfly ratio roll"?

My suggestion: Save your money. Instead, spend it on some good books
(eg. Natenberg), watch the free videos at the CBOE (especially Dan
Sheridan's), check out the educational materials that your broker
provides, read forums such as this one -- in short, learn the basics.
If you understand vertical spreads, you won't need to memorize the
details of how and when to do an "asymmetrical butterfly ratio roll"
versus a "symmetrical iron condor non-ratio roll", or what have you.
You'll just look at what you have now, decide whether you still want it,
figure out what you'd rather have instead, and then make the appropriate
changes. No fancy names required.

At least, that's my $0.02 worth...

Martin

__._,_.___
The goal of TheOptionClub is to provide a forum for members to work together for the purpose of furthering our individual understanding option trading.  All messages and postings, and any materials circulated are provided for discussion and educational purposes only.  No statement contained in any materials from TheOptionClub should be considered a recommendation to buy or sell a security or to provide investment, legal or tax advice.  All investors are encouraged to consult a qualified professional before trading in any security.  Stock and option trading involves risk and is not suitable for most people.  There is no guarantee that any information provided is accurate and, may in fact, be wrong.  It is understood that the participants in TheOptionClub have varying backgrounds and degrees of experience in option trading, and that regardless of experience each member is considered a student.  As such, any information distributed through TheOptionClub should be considered with a critical mind and not relied upon as an authoritative source.

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Saturday, May 30, 2009

[TheOptionClub.com] almost have it- where did I go wrong?



made a straddle. one leg 2.40, the other 1.62

the computer to enter says it is a debit of 1.75

why? and what do I do to close the position when it moves?

__._,_.___
The goal of TheOptionClub is to provide a forum for members to work together for the purpose of furthering our individual understanding option trading.  All messages and postings, and any materials circulated are provided for discussion and educational purposes only.  No statement contained in any materials from TheOptionClub should be considered a recommendation to buy or sell a security or to provide investment, legal or tax advice.  All investors are encouraged to consult a qualified professional before trading in any security.  Stock and option trading involves risk and is not suitable for most people.  There is no guarantee that any information provided is accurate and, may in fact, be wrong.  It is understood that the participants in TheOptionClub have varying backgrounds and degrees of experience in option trading, and that regardless of experience each member is considered a student.  As such, any information distributed through TheOptionClub should be considered with a critical mind and not relied upon as an authoritative source.

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