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Strategies & Market Trends : Advanced Option Strategies
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To: OX who wrote (275)1/26/2000 4:32:00 PM
From: tyc:>  Read Replies (1) of 355
 
Thanks OX ! You answered my question perfectly !

<<If, on the other hand, something serious and unexpected has changed w/ the underlying, I might consider getting rid of the long at some perdetermined price drop and then short the underlying at another predetermined price drop. I would give myself cushion on both these 'repair' moves so as not to 'waste' the cost of repairs. and have to put them on and take them off too often.

Your liking of split-strike straddles and my inclination toward hedging suggests intriguing possibilities.

What would you think of these two ideas as fundamental strategies;

1. Enter a position with the strike prices say 1 SD on either side of either a EMA or the current price. When the call side is in the money hedge with longs. When the put side is in the money hedge with shorts. When neither is ITM be flat.

2nd possibility;

2. Just leave the Option Position in the background. Consider only the current MA and trading bands above and below it. When the stock is more than 1 SD below the current MA, be short. When the stock is more than 1SD above the current MA be long. You would thus be protected agains t any significant move either on the upside or the downside while the substantial premiums of your option position erodes.

2. Just leave the option position in the back
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