Option Trading Articles: [ConservativeOptionStrategies] Re: Adjustment of current SPY diagonal leapspread position

Monday, April 12, 2010

[ConservativeOptionStrategies] Re: Adjustment of current SPY diagonal leapspread position

let me add, per my paper

on 3/9/10 i wanted in my buy and hold portfolio 1000 shares of spy....at 114.21 that would be an investment of 114,210 dollars

instead i bought the dec 12-80 leap for 36.30 or 36,300 dollars

114,210 minus 36300 or 87,910 goes into a cash account for two purposes
1) cost to roll out the leap approximately 12 months to expiration
2) add additional leaps when there is a market correction to replace the leaps that were sold to pay the obligations of short calls that were in the money......remember!!!!! we want to sell when market is up (ie. sell leaps to pay for itm short calls when underlying increases) and buy when market is down (use some of the cash in account to replace sold leaps to maintain......drjoe

--- In ConservativeOptionStrategies@yahoogroups.com, "joe & leigh" <gass20@...> wrote:
>
> new position established 03/09/2010 spy, an etf and adjustment
>
> initial leap position had a delta of 0.9 so i sold at ratio of 9:10 and sold short call atm
> the short call had almost no time value today remaining so i btc the short call position, stc 1 long leap position to cover most of the cost ...then sold the april 120 atm short call.....ratio of 7:9 thereby maintaining upside protection.....drjoe
>
>
>
> 04/12/2010 Sell To Open 7 SPY Apr10 120 Call $0.77 $523.96
> 04/12/2010 Buy To Close 9 SPY Apr10 114 Call $6.05 ($5,460.05)
> 04/12/2010 Sell To Close 1 SPY Dec12 80 Call $41.94 $4,178.97
> 03/09/2010 Sell To Open 9 SPY Apr10 114 Call $2.18 $1,946.92
> 03/09/2010 Buy To Open 10 SPY Dec12 80 Call $36.30 ($36,315.11)
>