SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : Options
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: RoseCampion who wrote (3040)2/16/2000 1:26:00 PM
From: David Lind   of 8096
 
Rose, you are correct regarding a repair for this short strangle strategy, in that if price nears or crosses ATM on either leg, the idea is just to exit the loser and keep the winner. If there is a large spread - which in this strategy there is - then one can be fairly confident of making a few dollars on the winner, for hopefully a total wash of the trade. The only killer would be if the stock moves very violently just after opening the trade before time has taken its toll on the premiums. Then one would have to make a gut check on whether price would trend back toward the mean, which is typical. This degree of violence hasn't happened to me yet, but it is always a potential. The pricing strategy I am using here has a 90-95% probability of each leg remaining OTM, but there is always that darn 5% lurking out there. But then again, without that this wouldn't be an interesting business, would it?

-David
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News