At the very least I'd consider ratcheting up the position by doing say -2
75/+4 100 ratio leaving you with twice the longs for zero debit or better. A
free ride on your bullish hunch.
-----Original Message-----
From: OptionClub@yahoogro
Behalf Of L
Sent: Thursday, September 24, 2009 8:31 AM
To: OptionClub@yahoogro
Subject: [TheOptionClub.
Hi - I'd love to have some help trying to make a proper adjustment to my
wonderful long position. I've looked the Michael's article/PDF "Trade
Adjustment Basics" and while I understand in in principle, I'm having
trouble applying it to this position.
I am Long 2 Calls on the GLD at 75 Strike, Jan 2010 expire. (GVDAW) I paid
around $14 for them back in Dec 2008. GLD is up around $99 now.
My outlook on GLD is bullish, but I know I could also easily be wrong and
could watch my gains evaporate.
According to Michael's adjustment decision tree, I would sell OTM calls.
Problem is that the the premiums at the 100 and higher strikes are so small
(less than $5.00) that they do little to protect my downside. If I go
further OTM, the premium becomes meaningless.
I've thought about buying a PUT at my BEP, that would be cheap at only
around $1.50 or so.
Quality problem, I know, but still, I'd love to get some guidance on
possible ways to proceed.
With thanks,
Lance
------------
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.
To unsubscribe from TheOptionClub, send an email to:
OptionClub-unsubscr
To unsubscribe from TheOptionClub, send an email to:
OptionClub-unsubscribe@yahoogroups.com
Change settings via the Web (Yahoo! ID required)
Change settings via email: Switch delivery to Daily Digest | Switch format to Traditional
Visit Your Group | Yahoo! Groups Terms of Use | Unsubscribe
No comments:
Post a Comment