Hi,
I appreciate your examples but have a hard time understanding because you tend to leave out pertinent data like BTO, STO, calls, puts. etc.
That being said, I really don't understand why the ITM Leap super put protection with such a high cost of time value.
Why not just buy the current month atm puts which are very cheap but if you have that sudden crash those puts protect you just as well.
Multiplying the 10 or 12 cheap puts, is still a lot less cost than your super leap put.
Also, by doing a cheap put each month you also can adjust the put to buy each month expecting this is nothing but cheap insurance.
Thanks.
Hank
--- In ConservativeOptionS
>
> 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
> >
> >
> > Good Morning Dr. Joe,
> >
> > 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.
> >
> > If I have followed your strategy correctly, I have the following:
> >
> > Today's date: Feb 17, 2010
> > IWM Last trade: $62.05 (Feb 16, 2010)
> >
> > IWM-DLS.
> >
> > Using the 7/10 SC/LC ratio. We now have the following.
> >
> > 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
> >
> > 805/21,930 = 3.6%
> >
> > Would this be a viable paper trade?
> >
> > Would it be prudent to use say a 10-20-30 rule?
> >
> > Thank you for your consideration in answering the above.
> >
> > Regards,
> > David Lim
> >
> >
> >
> >
> >
> >
> > 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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