Option Trading Articles: RE: [ConservativeOptionStrategies] MNTA

Tuesday, December 22, 2009

RE: [ConservativeOptionStrategies] MNTA

Jack,

Absolutely correct, option prices are correlated to stock prices thru delta. However. in expiration week, theta (time decay) takes over the month you are in ( in this case Dec) and delta controls the next month ( Jan).. Thats why you are always smart to give up a little to make a lot. Many say start monitoring a week before expiration and decide to roll out if it makes sense based upon their opinion of the stocks movement in expiration week.

The greeks are always involved and can be both your friend and enemy. The call writer loves theta!!

John (also a Jack)

--- On Tue, 12/22/09, Hand, John <john.hand@opm.gov> wrote:

From: Hand, John <john.hand@opm.gov>
Subject: RE: [ConservativeOptionStrategies] MNTA
To: "'ConservativeOptionStrategies@yahoogroups.com'" <ConservativeOptionStrategies@yahoogroups.com>
Date: Tuesday, December 22, 2009, 4:10 AM

John,

MNTA was higher last week, which would also affect the call price. Jack

-----Original Message-----
From: ConservativeOptionS trategies@ yahoogroups. com [mailto:Conservativ eOptionStrategie s@yahoogroups. com] On Behalf Of John Hudgens
Sent: Monday, December 21, 2009 6:40 PM
To: ConservativeOptionS trategies@ yahoogroups. com
Subject: [ConservativeOption Strategies] MNTA

Group

Last wens I opined on the wisdom of rolling out the Dec 12.50 MNTA to a Jan 12.50 by puirchasing the Dec for a nickle and selling the Jan for $1.10. I peeked at the Jan $12.50 today and it was at a lofty $0.70/ $0.60 (bid/ask)

This is an object lesson in: whenever expiration gets close, if your sold oiption is near worthless, if the next month looks juicy, roll out, give up a bit to make a lot.

John