Hi Claude; A lot of the confusion we seem to have has to do with me,
forgeting your mostly into "selling" the staddles. Were I have not
looked at that angle like I have the buying. It fails to
capture my interest as I'm not qualified to sell naked calls, and
at my age I don't intend move fixed income type money into the
equity account to the amount it would take to get qualified.
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I'm really a small fish in this ocean and don't kid myself other wise.
What little I made on AOL has been very hard come by, and if I get
my plate cleaned on the Jan98 puts I'l be looking at a sizable loss.
To me risk management has to be primary. The ( halfassed ) straddel
of buy calls/short the stock is the cheapest and has the less risk
of any of the positions.
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You seemed to agree with me on one point but I afraid you didn't
get the picture, perhaps I didn't paint it clear enough.
The hidden spread is the way the specalist skew the calls/puts
it's not always just a call that losses value faster than the
put gains , that happens when she goes down..it's exactly reversed
when she goes up the puts loss value faster than the calls gain.
This skewing is very noticable to me. Heavens if I were I big player
being I watch optins in one window and quotes in another, I can
tell you 90% of the time before the stock price reverses.
The option specilist on this stock are sharp, they have a good handle on the amount of trades "about to cross" and they stay in
in front of the price action. I'v said this several times, it's no
maybe, I doubt any one other than the specalist has looked at more
quotes than I have, as when I place a short term bet I'm locked into her all day, and every day till I close it, I'v daytraded options on
this thing more times than I can remember, and would have to
pull up another program to count them. Heck I'v still got a stack of
comfomation letters to go through and check aginst my stock
program you wouldn't belive. My unopened mail from the broker is
a foot high and growing. Small fish I am but also a brokers dream
come true, I might not trade big but I trade more often than any
normal trader in fact it's getting silly even to me as I'm coming
to realize that there is no way I can keep up with as many short
term positions I take..as a result even my winners cause me to over
look other stuff and I suffer a plain out "dumb" loss enter a bet
I would not have entered , or fail to move on another one.
Hell I had MCIC peged, and failed to place the bet..now when I discovered she was primed for her fall, it was after I was involved
with 6 others, I could see she had a stronger indication of falling
than any short position I already had, but the dilmea was too many
open trades and I wanted to close something before jumping on MCIC,
and hoped she would wait just a bit before diving untill I could.
So thats a proplem with me, already to many short term
irons in the fire to keep up with in the way they should be
followed. Heck AOL looks inviting right now , but they got the put
premiums jacked up high and 1/4 point spreads, to much demand for
the supply..so the heck with her..I also know if she goes down
due to the spread the puts will not gain value very fast, anyway
I got to go out of town this week so I'm simply going to put in
some good to cansel orders on my other open calls/puts coming
up, to close and wish them well.
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Your selling naked calls is beyond the scop of what I do or intend
to..I got more on my plate now than I can deal with.
I have sold puts in the past and found that tied up to much capital,
and BTW..you didn't look good if you think buy calls/sell short
ties up more capital than a straddel..it's the cheaper and only
ties up the call money, the calls themself become and remain my
collateral no matter if the stock goes to heaven. If you sell both positions then both of them require enough in the account to pick
up the stock, or to furnish it, and you may have no problem
with that, there is no way I could afford to do it, gezz if I played
all my positions like that I'd have to be have a lot more in
my account than I could put there even if I put up my bonds,
which is a no no to me. <G>
I leveage with puts/calls but it's limited to what I know I can
replace in a year via my income from other sorces, in the event
I get into some bad bets. Right now to stay within the limits
of my gambling money, and to have some dry powder for the rest
of this year I'v got were the short term bets are getting less
and less, as I'v taken on JAN 98 with ADBE, calls, as well as
the Jan98 puts in AOL, and want to have a little reserve to
average them down if need be. If I lose in both cases, I'l
have about all the loss leveragng that I feel safe to handle in one
year. So I have to see thoes positions improve some before I
consider many more. PZL I jumped on to quick and is eating my
lunch, I played her on a hunch..and not my usuall style,
ADCT, seems to have turned on me too..but I'v got August puts
on her so we'll see what August brings..it's not looking like
as good a bet as I first thought, and I should have closed it and
grabed MCIC when I discovered the huge fall off of short interest
in her.
Jim
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