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Strategies & Market Trends : Selling Puts: Have Cash Will Travel
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To: OX who wrote (849)1/21/2000 4:44:00 PM
From: tyc:>  Read Replies (3) of 1235
 
You ask whether I would close one side of the straddle. Definitely not. In my strategy I NEVER touch the straddle.
I use TA to help me form an opinion on what my bias shd be.

If my puts are in the money, AND the stock heads south, I will hedge the position by shorting common. Even if I short (successfully and profitably) only 100 shares, I know that my short-lived hedge has enhanced the profit profile of the entire position.

Actually I am bullish on the stock, I am looking forward to the puts being OUT-of-the-money and the calls in the money, and the technical indicators also bullish. In this situation I shall be long the stock with the straddle still in the background. If the stock turns south again, I shall sell the common, and what I have earned on the common will also have enhanced the original profit profile.

The only task is to make a little money on the common hedge; be it long or short ! If I accomplish that task the originally generous profit profile will have been enhanced.

Look at the profit profile offered by MSFT straddle. My bet is that it extends throughout the entire expected trading range of MSFT. I am unfamiliar with these Gorillas. Please tell me what you would expect the trading range to be and what range a straddle would cover.
i.e
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