Re: [TheOptionClub.com] Re: Best Adjustment Method [1 Attachment]

 

[Attachment(s) from Ricky Jimenez included below]

On Fri, 26 Mar 2010 18:45:49 -0500, "mcatolico"
<mcatolico@mindspring.com> wrote:

>MC - no way would the adjustment be a large debit. it's basically an iron
>butterfly (credit spread) plus a couple otm long calls (minor debit) that
>may or may net into a total debit depending on the obvious factors. As far
>as what the position looks like it's clear that at 190 you have a winner
>(not a loser)

You are right, Michael, that 190 was the best outcome but I wouldn't
call it a winner. To settle the argument (without pistols, boxing
gloves, etc.) as to whether this adjustment is possible, I went to the
OCC Options Calculator and put in the numbers you gave. Volatility
35%, 28 days until expiration, underlying at 185 and got for the
initial position, the prices:
175c 13.09,
180c 9.86,
190c 5.03,
195c 3.41.

Then I changed the underlying to be at 191 with 26 days until
expiration:
185p 4.40
190p 6.60
190c 7.625
195c 5.38 (not so cheap after all). Attached is the expiration graph
with the original condor in blue and the adjusted position in black.

__._,_.___

Attachment(s) from Ricky Jimenez

1 of 1 Photo(s)

MC_Scenario2.jpg

Reply to sender | Reply to group | Reply via web post | Start a New Topic

Messages in this topic (10)

Recent Activity:

• New Members 5

Visit Your Group

The goal of TheOptionClub is to provide a forum for members to work together for the purpose of furthering our individual understanding option trading.  All messages and postings, and any materials circulated are provided for discussion and educational purposes only.  No statement contained in any materials from TheOptionClub should be considered a recommendation to buy or sell a security or to provide investment, legal or tax advice.  All investors are encouraged to consult a qualified professional before trading in any security.  Stock and option trading involves risk and is not suitable for most people.  There is no guarantee that any information provided is accurate and, may in fact, be wrong.  It is understood that the participants in TheOptionClub have varying backgrounds and degrees of experience in option trading, and that regardless of experience each member is considered a student.  As such, any information distributed through TheOptionClub should be considered with a critical mind and not relied upon as an authoritative source.

To unsubscribe from TheOptionClub, send an email to:
OptionClub-unsubscribe@yahoogroups.com

Switch to: Text-Only, Daily Digest • Unsubscribe • Terms of Use

.

__,_._,___