geoff...ot ot ot "how do you obtain such a good price"
yes i realize, that is why i took it, i'm not a random casual position setter, on any given day i have seven figures of stock that can be assigned. i do it for an income stream, returning 3%(conservative) to 10%(aggressive)per month on cash or capacity.
first you must be intimate with the underlying fundamentals of the company and how it applies to the share price. around 2/17, an event occurred....that event was niles downgrading dell. this was on the heels of cpq fiasco, gerstners "pc is dead", hwp reinventing itself....it caused a rush from dell common, (put buyers are greedy at this point, thinking the world has ended) which exacerbated the implied volatility of the option. the interesting thing about the 2/17 sale at 26 (actually was presplit stock at 82.5, premium of 52)was the stock dropped to the mid thirties and the premium never went above 26, due to a normalization of volatility. my guess at the time was that dell would trade above fifty prior to expiration....it did in december, but i did not close the position, as i still believe dell if it manages the market expectations properly will see fifty by 3q2000.
there is no formula that can predict an inflated implied volatility, it is a pure psychological factor....as mark peterson recently stated.."ya gotta be counter intuitive" more so with options trades then in equities...
note in your calculations the qcom example. the stock was oversold, technically turning this morning, hence the better implied volatility...i took positions on qcom put sales on the open |
