david
what is the 10-20-30 rule?
the position is good. i would consider doing 8:10 or 9:10 ratio instead of the 7:10....your long leap is over 9 delta.
i have been considering a long leap put ditm like a 70 jan12 put. during the correction of 40% even though i was able to generate monthly income it wasn't what i considered satisfactory. i applaud you by paper trading first. i always tell people anytime you consider a new option strategy do at a minimum 6 months preferably 12 months paper trading first...drjoe
--- In ConservativeOptionS
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> Good Morning Dr. Joe,
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> I was chatting with a fellow trader regarding your post of DIA-DLS. I am trying to execute a paper trade to get more familiar with the strategy you formulated. I would like to use one of the other surrogate that you mentioned - IWM.
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> If I have followed your strategy correctly, I have the following:
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> Today's date: Feb 17, 2010
> IWM Last trade: $62.05 (Feb 16, 2010)
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> IWM-DLS.
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> Using the 7/10 SC/LC ratio. We now have the following.
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> Buy 10 Jan12 40 IWM C @ $21.93 Delta .9311 - Total $21,930.00
> Sell 7 Mar10 63 IWM C @ $1.15 - Total $805.00
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> 805/21,930 = 3.6%
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> Would this be a viable paper trade?
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> Would it be prudent to use say a 10-20-30 rule?
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> Thank you for your consideration in answering the above.
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> Regards,
> David Lim
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> Jack, I must have read Dr. Joe's Yahoo Post #832 a dozen times to learn, still need some help I am afraid.
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