Dr. Joe,
I fully understand your reasons for using ETFs as the underlying for the income strategies you have designed. I was wondering if you ever use the put/write with ditm leap when attempting to purchase an individual stock? For example, if you wanted to own a large liquid stock that offers leaps such as PFE or a REIT such as NLY but wanted to control risk, would you apply this strategy to enter the position?
Also, if assigned the stock you stated in one post that you begin selling covered calls. May I assume you continue to own the leap until the stock is called away and then additional short puts are sold? Like DLS, this is an ongoing strategy?
Jack
I fully understand your reasons for using ETFs as the underlying for the income strategies you have designed. I was wondering if you ever use the put/write with ditm leap when attempting to purchase an individual stock? For example, if you wanted to own a large liquid stock that offers leaps such as PFE or a REIT such as NLY but wanted to control risk, would you apply this strategy to enter the position?
Also, if assigned the stock you stated in one post that you begin selling covered calls. May I assume you continue to own the leap until the stock is called away and then additional short puts are sold? Like DLS, this is an ongoing strategy?
Jack
From: joe & leigh <gass20@aol.com>
To: ConservativeOptionS
Sent: Sat, February 27, 2010 8:30:42 PM
Subject: [ConservativeOption
ken,
regarding the short put paper: i now manage the leap long puts differently.
when i sell a 90 day put i immediately buy a leap ditm put for protection risking no more than 10% of capital. there is no margin requirements in that position. with the ditm put it is a good thing (not bad) if the stock increases in value. i manage the leap put to decrease my risk when the underlying reaches the strike value of the leap put. i stc the leap put and bto another leap put that again is ditm. each time i do that my risk decreases and i continue selling 90 day puts. drjoe
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