Hi Claude; It sounds , and even looks good on paper untill you
track both sides of the option at the same time and start looking
at the hidden overhead. I can see one side at a time , I have
bought calls on AOL. Come to think of it I did a sort of straddle,
had puts and they did good , but I wanted more and the chance to
ride her on down, so instead of selling the puts I bought calls,
and I was nicely hedged so I thought, but when she reversed the
puts lost value much faster than the calls gained, I dumped out
out of the puts , ( at a profit ) and held the calls and made
money on them..but when I added up the amounts it killed my
percentage..the bookies made out really good.
It don't ever turn out the way it looks on paper, I should have
sold the puts right off, and got the calls I'v looked over the
Straddle thing too much to give it much credance..with one exception,
and that is the day before earnings come out, then it's a quick in
and quick out, and you hope like hell for a surprise that compleatly
wipes out one position ( you don't want it to be worth selling )
in that case the other position should , or at least may pay off,
still I have the extra commisions not to mention the spread they
get me with going and coming. So I mostly prefer to play her one
way at a time. I'll back track some old option sheets I have saved
to see if this would apply to the long term puts, I haven't checked
out that angle on leaps. But the short term stuff don't look hot,
heck 3 weeks ago she just about stalled out and the time would have
eat you up on both sides of the fence, she has to move a lot and
fairly soon to come out on it, and if you think you know which way
why your giving up 50% to start with, hence It's for thoes times
you expect a surprise..look at AMD..with all the mumbo jumpo,
and the swing up , then the bad earnings, then the sell off after
hours, then the rebound today just about were she started,
no one made a dime on the straddles they all lost.
Jim |
