Monday, November 2, 2009

Re: [TheOptionClub.com] Risk Free Position in XOM

 

On Mon, 02 Nov 2009 04:54:18 -0000, "drrobhansen"
<robhansen5252@hotmail.com> wrote:

>In late September I took a position in Exxon buying stock at $69.14. When earnings were about to come out, I wanted to protect myself against a downtrend in the oils, so I purchased the April 75 puts for $5.30. So the cost of the entire position is $74.44 and I'm protected until next April at $75.00. Right now I am ahead on the stock $2.53 and ahead on the put $1.95. My question is: Are there any positions I can take at this time to lock in some decent gains while at the same time leaving myself open for more upside if oil decides to skyrocket sometime before next April. I don't want to get called away any time soon. How should I be playing this unusual (for me) situation?
>
>
>Thanks,
>RFH

It might simplify your considerations by regarding your position as
having the same risk profile as long April 75 calls. Of course there
are lots of ways to play them. My preference leans towards diagonal
backspreads. Sell half the number of Nov 70 calls and each month,
rollover the entire options position so that the lower strike is close
to the money.

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