Thursday, July 1, 2010

[ConservativeOptionStrategies] Re: VVUS again

 

If you care to talk about it, I think we could learn from your experience and your analysis of what went wrong.
Lou

--- In ConservativeOptionStrategies@yahoogroups.com, fred barbour <barbour2p@...> wrote:
>
> I did a condor trade once using 6 contracts,did the appropriate management moves when the markets turned directional..lost $6350,could have lost alot more..sure was fun..."not".
>
> Fred
>
>
>
>
> ________________________________
> From: Louis <loupi3@...>
> To: ConservativeOptionStrategies@yahoogroups.com
> Sent: Tue, June 29, 2010 11:18:10 PM
> Subject: [ConservativeOptionStrategies] VVUS again
>
>  
> I finally took a little bite and entered an order for a couple of contracts on a condor. This is my first condor so I just want to get my feet wet without getting nervous.
> The details (all July): long put @ 5, short put @ 6, short call @ 15, long call @ 16. Net credit if filled .60 (between bid/ask).
> Max profit 60 between 6 and 15; max loss 40 below 5 or above 16; breakevens at 5.40 and 15.60. It appears to be a fairly conservative position.
> Two questions I have:
> First, how do I figure profit? I'm guessing something like the difference between the short strike exposures (900) divided by the profit or loss, so that if I made the max profit of 60, the profit would be 60/900 or 7%? Somehow that doesn't seem correct. It would intuitively seem to me to be 100%, but if that were the case, how would I figure a $30 profit, or a $20 loss?
> Second, what surprises should I be watching for (other than the obvious possible major price swing)?
> Lou
>

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[ConservativeOptionStrategies] FSYS need advise?

 

Massy was involved in the coal mine explosion and I think the stock will continue to decline until the liabilities are resolved.  I suggest that the Jan.11c  strike be sold for 7.45 which will bring you cost base down to $34.50.  If mee continues to fall, and the call premium declines to $1.50, you could roll the call to pick up some more premium.
 
Also, you could use some of that $7,450 premium to pick up some oct.27 puts and sell jul.25 puts to help offset some of the put costs.
 
Or just sell mee and move on.

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Re: [ConservativeOptionStrategies] FSYS need advise?

 

                    Jeff,
                         I would sell front month or one month out options to capitalize on the rapid deterioration at the end of the options life. It is true that you will have to buy/back options that go ITM or be called away. Try to think longer term. Each month you will capture time value and should your stock run up, you will give back a portion of the gain to roll-up. Selling a few months further out and a few strikes OTM will get you there also but I would suggest start doing that once this bear returns to hibernation.
                         Another thing to consider is that most stocks and ETFs do not fall straight down in a market decline. You could attempt to sell calls on short term corrections to the upside and perhaps be OTM  by expiration, your short calls would expire worthless and you keep the premium, reducing you cost basis. Market timing is not for everyone and you will not always be perfect. Take what you can, small base hits, forget the "home runs."
                         Depending on how much capital you wish to allocate to this position, you may also think about adding shares at a point where you are convinced that the decline is over. You will get back to break-even faster but take care not to commit too many eggs into one basket.
                         I hold underwater stocks and ETFs but receive income from them each month. Over time, the cost basis is steadily dropping,,,patience is the key! Hope this helps.
                                           Regards and great trading,
                                                                    Jack W  


From: "devdanbrit@yahoo.com" <devdanbrit@yahoo.com>
To: ConservativeOptionStrategies@yahoogroups.com
Sent: Thu, July 1, 2010 11:44:24 AM
Subject: Re: [ConservativeOptionStrategies] FSYS need advise?

 

Jack

Thanks!!

Question on this MEE how far out are u saying to do the at the money calls MEE?

Atm if the stock turns up would I have to buy back at loss?

Thanks

Sent from my Verizon Wireless BlackBerry


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Re: [ConservativeOptionStrategies] FSYS need advise?

 

Jack

Thanks!!

Question on this MEE how far out are u saying to do the at the money calls MEE?

Atm if the stock turns up would I have to buy back at loss?

Thanks

Sent from my Verizon Wireless BlackBerry

From: Jack Wigandt <nhhobbyfarmer@yahoo.com>
Sender: ConservativeOptionStrategies@yahoogroups.com
Date: Thu, 1 Jul 2010 05:51:51 -0700 (PDT)
To: <ConservativeOptionStrategies@yahoogroups.com>
ReplyTo: ConservativeOptionStrategies@yahoogroups.com
Subject: Re: [ConservativeOptionStrategies] FSYS need advise?

 

                   Jeff,
                         Welcome to the group, you sure will learn a lot here.
First off, the world is not yet ending, there is hope for this position. I assume that you do not want to cut losses short by selling and a repair strategy is what you are asking for.
                          MEE appears to be in a down trend for now and that .06 dividend will not help a lot to cushion the fall. I would consider selling calls to lower my cost basis. ATM, (AT The Money) calls have the most time value but  you may sell calls deeper ITM (In The Money) and have more downside protection. If you decide to purchase PUT protection consider going out in time, perhaps LEAP PUTs to minimize time value erosion, that way you will recover some money  when MEE starts to run again  
                           When / if the economy gets back on track, coal will be part of the "big picture" and you will be able to sell OTM (Out of The Money) as the stock recovers. With many technologies depending on coal as a feed stock, today's trend may well be just a bump in the road. Take a look at what SASOL(http://www.sasol.com/sasol_internet/frontend/navigation.jsp?navid=1&rootid=1) is doing to improve WW2 technology and produce clean fuels from coal.
                                          Regards and great trading,
                                                                   Jack W 


From: "devdanbrit@yahoo.com" <devdanbrit@yahoo.com>
To: ConservativeOptionStrategies@yahoogroups.com
Sent: Thu, July 1, 2010 1:14:29 AM
Subject: [ConservativeOptionStrategies] FSYS need advise?

 

New to board and really happy to be here. I think this market may have shown its bear claws

I have 1000 shares of MEE bought at 42 and now its at 27.50 no current calls or puts

What on earth can I do now?? I'm really in a jam

Thanks in advance

Jeff
Sent from my Verizon Wireless BlackBerry


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[ConservativeOptionStrategies] Re: DLS in XLE Question

 

RFH,

By my calculations you are profitable by $5,050 or 16%. Your choices are these:

1. close out the whole thing and book your profits.
2. Allow your position to be assigned and then sell covered calls.
3. Roll your shorts out a month or more and down a strike or more for a credit or a very small debit.

I recommend option 1, you can then start over with a new trade. By the way, you are profitable because you left 3 longs uncovered.

Rick

--- In ConservativeOptionStrategies@yahoogroups.com, "RobertH" <robhansen5252@...> wrote:
>
> I have a diagonal leap put spread going in XLE (current price 49.68). Here are the details:
>
> long 13 XLE Jan12 80 puts cost basis 24.35 (current price 31.65) delta -.95
>
> Short 5 Jul 55 puts cost basis 1.59 (current price 5.75) Delta -.91
>
> Short 5 Jul 56 puts cost basis 1.98 (current price 6.70) Delta -.94
>
> The delta of the entire position stands at -296.20. I'm at a loss as to what to do with this position. I'm sure the huge negative delta is due to the 3 more leaps I have than short puts. I've been reluctant to take off the shorts since my history dictates that as soon as I do, the underlying changes direction and starts shooting up.
>
> Any Suggestions?
>
> Thanks,
> RFH
>

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Re: [ConservativeOptionStrategies] FSYS need advise?

 

                   Jeff,
                         Welcome to the group, you sure will learn a lot here.
First off, the world is not yet ending, there is hope for this position. I assume that you do not want to cut losses short by selling and a repair strategy is what you are asking for.
                          MEE appears to be in a down trend for now and that .06 dividend will not help a lot to cushion the fall. I would consider selling calls to lower my cost basis. ATM, (AT The Money) calls have the most time value but  you may sell calls deeper ITM (In The Money) and have more downside protection. If you decide to purchase PUT protection consider going out in time, perhaps LEAP PUTs to minimize time value erosion, that way you will recover some money  when MEE starts to run again  
                           When / if the economy gets back on track, coal will be part of the "big picture" and you will be able to sell OTM (Out of The Money) as the stock recovers. With many technologies depending on coal as a feed stock, today's trend may well be just a bump in the road. Take a look at what SASOL(http://www.sasol.com/sasol_internet/frontend/navigation.jsp?navid=1&rootid=1) is doing to improve WW2 technology and produce clean fuels from coal.
                                          Regards and great trading,
                                                                   Jack W 


From: "devdanbrit@yahoo.com" <devdanbrit@yahoo.com>
To: ConservativeOptionStrategies@yahoogroups.com
Sent: Thu, July 1, 2010 1:14:29 AM
Subject: [ConservativeOptionStrategies] FSYS need advise?

 

New to board and really happy to be here. I think this market may have shown its bear claws

I have 1000 shares of MEE bought at 42 and now its at 27.50 no current calls or puts

What on earth can I do now?? I'm really in a jam

Thanks in advance

Jeff
Sent from my Verizon Wireless BlackBerry


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[ConservativeOptionStrategies] Re: FSYS need advise?

 

Jeff,
You are in a tough position. You can just get out and take the loss. Alternatively you can construct a collar by selling some long-dated calls up near your purchase price and also protect further downside by purchasing 10 protectve puts just under the current price. Next time you buy some stock make absolutely sure you know your exit strategy and get out when your stop is hit.

OptionsMike
www.safe-options-trading-income.com

--- In ConservativeOptionStrategies@yahoogroups.com, devdanbrit@... wrote:
>
> New to board and really happy to be here. I think this market may have shown its bear claws
>
> I have 1000 shares of MEE bought at 42 and now its at 27.50 no current calls or puts
>
> What on earth can I do now?? I'm really in a jam
>
> Thanks in advance
>
> Jeff
> Sent from my Verizon Wireless BlackBerry
>

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