donna...."jdsu sep240 puts"
nothing wrong with that strategy, i did the 200's for several reasons, which if correct can cause the premium to erode by about half within the next sixty days...the same would apply to the 240's. we must assume a flat to upward bias, the stock will split on 3/10?, potential of addition to s+p?, and strong probability of leap contract availability announced mid may. the leap contracts in itself will skew the short term implied volatility as it alters contract supply and demand.
was very successful doing the same with brcm dec 310, with the stock at 290.......catch it a good point and you profit. jdsu appears at a good point, stock dropped, but so did put premiums, a reflection of supply and demand....
boldest move was selling dell 0160's and 55's (i should have covered early jan with the stock at 52!!!!), which gives me a assigned cost of 34....now above by 10%, so in essence i'm moving point by point with the underlying as all volatility factors about gone, no different then me going long today....it has tied up capacity, perhaps better use of same, the cash in was reinvested and has had better then average returns (emc at 35 split adjusted) but at times you have to assume risk to see if a strategy will work in the real world! |
