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Strategies & Market Trends : Advanced Option Strategies
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To: jjs_ynot who wrote (263)1/26/2000 12:19:00 AM
From: tyc:>  Read Replies (2) of 355
 
If I may make an observation.... I have just glanced at the straddle recommendation and note that it involves the purchase of common stock. IMHO This is fine when the call side is in the money; but if the stock price drops and the puts get to be in-the-money, the whole position will get very "bullish ( i.e. vulnerable on the downside). It is this latter situation that I have become familiar with. When the puts are In-the-money the downside risk should be hedged with short stock, not long.
Of course if you are only talking about a single put and a single call, perhaps downside vulnerability might not be important. But it probably would worry me !
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