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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: ChanceIs who wrote (62018)3/24/2006 3:52:53 PM
From: manalagi   of 206244
 
My favorite play in the oil field is Marathon Oil (MRO). The stock has been somewhat volatile providing opportunities for option plays.

How about some critiques on the following play:

1. Long term bullish on MRO. Argus Research has a target price of 95.

2. Option plays: Leaps January 2007, giving sufficient time for recovery if oil drops to the 50's.

3. Strategy: Sell Leaps Jan 07 out of the money collecting premium

4. Use the proceeds to buy Leaps Jan 07 in the money call.

5. Patience, patience, and wait for a pull back.

6. When the stock recovers then close both the call and put position, and repeat the process on a pull back.

7. Here we are using OPM.

8. Cannot do it in IRA, and must have enough margin capacity.

9. I have done it several times.

Any comment as what is wrong with this strategy?
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