Option Trading Articles: [ConservativeOptionStrategies] Re: 2 questions

Drjor,

I tried to following your trade, here is the price on yahoo finance for iwm:

Date Open High Low Close Volume Adj Close*
12-Oct-09 61.79 62.03 61.14 61.43 26,895,500 61.18
28-Oct-09 58.59 58.80 56.59 56.83 84,951,000 56.60

so I guess you did your initial sto on 10/28/10, not 10/12/10 ?

Another question, when do you usually roll up your DITM leap put ? i thought you do it when it 'at the money' so you get the most time value. But I saw you waited until iwm hit $65,$5 out of money.

By the way, will you roll down you leap when iwm goes down $10 after you initiated the trade?

Thanks,

Zack

--- In ConservativeOptionStrategies@yahoogroups.com, "joe & leigh" <gass20@...> wrote:
>
> zack,,,,don't remember what iwm was at the time of selling the 58 short put......i usually sell atm so probably around 58
>
> the leap long put....iwm was at 58.05.....there is no reason for buying the protection 16 days after short put.....i just didn't get around to buying the put....no logical reason...drjoe
>
> --- In ConservativeOptionStrategies@yahoogroups.com, "chao0105" <chao0105@> wrote:
> >
> > Drjor,
> >
> > Thanks for posting the details, I got 2 questions:
> >
> > 1. > 10/12/09 sto, 20k's, short put, @1.02 strike 58 11/20/09 expiration
> > >expired
> >
> > what's price of IWM at that time ?
> >
> >
> > 2. > 10/28/09 bto, 20k's long put @ - 12.05 strike 60 1/20/12 expiration
> >
> > Why did this trade was initiated 16 days after the sto ? what's the IWM price at that time made you do this ?
> >
> > Thanks
> >
> > Zack
> >
> > --- In ConservativeOptionStrategies@yahoogroups.com, "joe & leigh" <gass20@> wrote:
> > >
> > > i would like to an actual real-time example of what i do with my diagonal put spreads.
> > >
> > > 10/12/09 sto, 20k's, short put, @1.02 strike 58 11/20/09 expiration
> > > expired
> > >
> > > 11/23/09 sto, 20k's, short put, @1.56 strike 60 12/18/09 expiration
> > > expired
> > >
> > > 12/23/09 sto, 20k's, short put, @1.54 strike 60 2/19/10 expiration
> > > expired
> > >
> > > 2/23/10 sto, 20k's, short put, @ 0.72 strike 60 3/19/10 expiration
> > >
> > > 3/3/10 btc, 20k's, short put, @ - 0.15
> > >
> > > 3/3/10 sto, 20k's, short put @ 1.81 strike 65 4/16/10 expiration
> > >
> > > total premiums collected to date = 6.50
> > >
> > > PROTECTION
> > > 10/28/09 bto, 20k's long put @ - 12.05 strike 60 1/20/12 expiration
> > > since i am obligated to purhase stock at 60 strike (initial short put strike) and i paid 12.05 for protection my net obligation is 60+12.05 or 72.05.....but guaranteed 60 (long put strike) or a total of 12.05 at risk which is 20.1% (iwm was at 58.05) a lot higher at risk that i usually do but i felt the market was in an uptrend
> > >
> > > now, what should i do? i will on monday if markets open favorably.
> > >
> > > well let's consider this:
> > >
> > > 3/8/10 stc, 20k's current long put strike 60 for 6.60 and then bto, long put strike 70 for 11.64.....this adds (11.64-6.60) or 5.04 to my net obligation/investment 72.05 above plus the new 5.04 or 77.09 but i am guaranteed now 70 (new long put strike) or a total of 7.09 at risk which is 7.09/70 or 10.1% cutting my risk in half so owning a long put with a rising stock price is not necessarily a bad thing
> > >
> > > however, i received a total of 6.50 in premiums from selling short calls to date...so 7.09-6.50 or 0.59 is now at risk....that is 0.59/70 or 0.84% essentially risk free....
> > >
> > > i will have until jan12 or 22 months to collect short put premiums, if assigned, sell calls and if they are assigned also go back to selling short puts....all without virtually no risk at all....drjoe
> > >
> > > i will let you know what i do......
> > >
> >
>