Monday, November 2, 2009

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

 

Rob

There are many ways that you could play this in terms of bullish/bearish; agressive/defensive; strikes/months; limited/unlimited risk; but following from Ricky's post ....

- Your Long Underlying / Long Put combo is sythetically a Long Call for a synthetic credit of $0.56..

- Your objective is to Lock in some gains and participate in any upside moves ..

- I have attached some screenshots in the Files section '1.01 XOM April 2010' which illustrate some possible adjustments, using the April 80/85 strikes only..

- Adjustment 1: -1 80 Call
- Adjustment 2: -1 80 / +1 85 Call Spread
- Adjustment 3: -2 80 / +2 85 Call Spreads

Would be interested to know what you eventually decide to do ....

Cheers
James

--- In OptionClub@yahoogroups.com, Ricky Jimenez <rickyjim@...> wrote:
>
> On Mon, 02 Nov 2009 04:54:18 -0000, "drrobhansen"
> <robhansen5252@...> 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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