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Strategies & Market Trends : Options
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To: edamo who wrote (2995)2/15/2000 5:50:00 PM
From: David Lind  Read Replies (1) of 8096
 
Short Strangles - I'm interested in hearing from anyone on the thread who has traded conservative short strangles with far OTM calls and puts. I've recently fallen into this strategy as an addition to selling OTM puts for income. The logic here is that with the addition of a call premium, it's possible to move farther OTM and maintain a decent total premium level for a 30-day trade. Further, no margin is required for the additional option, at least with my broker (Brown.) On issues with high volatility, it's possible to get a decent premium return while keeping both call and put strikes outside 50-day standard deviations, which gives the stock a lot of room for movement.

So far my limited experience has been good, but I'd like to hear from anyone else who has played the same game. All comments are welcome and appreciated.

-David
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