Thursday, January 7, 2010

Re: [TheOptionClub.com] please educate me

 


I think it's sound advice to close the position, take a tidy percentage gain and release the capital.  I imagine tos is holding margin on only one side of the straddle (you might check to be sure, especially if legged in putting on two separate trades.)  You should be able to leg out, or spread out to a condor.  The 1120 Feb straddle is theoretically $55 and you might get it, but it could take some time to fill.  You can literally call tos and ask them for your best move.  Years ago, I used to call them all the broker all the time to clean up whatever I'd spilled on the floor.  Don't be timid and don't be proud.

If you want to play this position longer, you have to at least prepare yourself for a potential shift in the market tomorrow with the jobs data.

You might look a the market depth and a chart of the price of the straddle for the last few weeks against the underlying price, then study the risk profile to plan what you would do at each price break (break even or loss.)

I just saw a single go through, so maybe you just closed the position.

Advice from some pro traders suggests that straddles (sold or bot) require skilled handling of the greeks and attention to volatility -- in short, the advice is to avoid strads.

I would not proceed with the trade into Friday without being very sure of a plan to act decisively.




On Thu, Jan 7, 2010 at 8:58 AM, CHARLES I WEBSTER III <kipwebster@yahoo.com> wrote:
 

paul7313.....today(Thurs/ Jan 7 at 10:30 A CST) the SPX "10 FEB 1120 Straddle is
                  about $55.00 ...why not BTC to lock in $11 profit????

You're never old, unless
you think you are; but it
IS later than you think!

kipwebster@yahoo.com

--- On Thu, 1/7/10, paul7313 <paul7313@yahoo.com> wrote:

From: paul7313 <paul7313@yahoo.com>
Subject: [TheOptionClub.com] please educate me
To: OptionClub@yahoogroups.com
Date: Thursday, January 7, 2010, 10:48 AM


 
first off the index was spx. I sold a call and a put at 1120 for $66. expire in feb 2010.

Since the index is moving, is it better to buy back the position before expiration or let it expire on its own? What is the cutoff before I must worry?




--
Adam

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