I'm not sure I follow. My instinct is to take my profits, sell what's left of the OTM section and close the position once it's moved 10% or so and then move on. The market in general is so volatile that gains can disappear quickly.
Lou
--- In ConservativeOptionStrategies@yahoogroups.com, rdmacarthur <rdmac@...> wrote:
>
> Your thinking is right.
> Consider selling either a call or put further out AFTER the stock moves.
> I'll help reduce your cb. It reduces possible profit, but reduces cost and risk.
> When it moves up $3, call an atm call. Will give you a call spread, and a put.
> Mirror on the downside.
> Doug
> rdmac@...
>
>
>
>
> On Jun 11, 2010, at 12:44 PM, Louis wrote:
>
> > Lately I've been experimenting with straddles (I hope I've got my terminology correct)where I buy a put and a call about one strike apart for the same month. As far as I can see, max loss is the cost of the two options and max gain is basically unlimited regardless of whether the stock goes up or goes down. I dipped my toe in a bit with BP and BAC, figuring their volatility would give me some practice in using this method. The past two days have been interesting watching them ride up and/or down on the u-shaped P&L graph.
> > Any thoughts on this?
> > Lou
> >
> >
>
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