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Pastimes : Home on the range where the buffalo roam
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To: Walter Xie who wrote (9026)1/17/2001 11:23:45 AM
From: brightness00   of 13572
 
"In case the stock moves against your option in AH, you may just buy into the stock to hedge your put or actually lock in your profit to today's effect. Is that true?"

IMHO, that only cuts down losses to a certain degree; you lose the option premium at the least. I used to write puts and calls on the day leading to the earnings report, with counter-balancing hedge in the underlying equity itself, just to capture the option premium. I agree with Greg, buying option on the day of report is a dangerous game to play; even taking up equity positions for that matter. The only safer plays are the ones involving the late stragglers in the earnings parade when the market mood has swung one way or the other and ripe for riposte.

Best,
Jim
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