My mistake. Murthy got it correct.
From: OptionClub@yahoogro
Sent: Tuesday, June 02, 2009 9:15 PM
To: OptionClub@yahoogro
Subject: Re: [TheOptionClub.
Hmmmm. Michael, I believe he said the stock is trading at 100 and not necessarily own the underlying. I could be wrong ...
I read it as selling a 90 straddle when the underlying is trading at 100.
If the stock goes a lot lower, you could let the stock get put to you at 90. Call will expire worthless.
But if the stock goes a lot higher (say to 120), you will lose $30 minus the credit received.
Murthy
On Tue, Jun 2, 2009 at 5:30 PM, mcatolico <mcatolico@mindsprin
If you sell the put and the call you cannot exercise either option. If it's
European options and the call is exercised, that means the put would have
expired worthless.
Will it work? Synthetically this position is simply short two 90 puts (naked
or unhedged). It will work if the stock goes up or stays above the 90
strike less the net premium received on the short options.
-----Original Message-----
From: OptionClub@yahoogro
Behalf Of paul7313
Sent: Tuesday, June 02, 2009 7:09 PM
To: OptionClub@yahoogro
Subject: [TheOptionClub.
stock trading at 100
sell a put and a call at 90
if the call is exorcised, exercise the put (european)
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