Boris,
After your second explanation, I was a little clearer on your strategy. Originally, I thought you were planning on doing it with short term options. My comment on the explanation:
Message 13482734
is that for the position to be profitable, (compared to doing nothing) you are counting on the stock to nearly double (going from 70 to 130). If the stock doesn't reach that, you would be leaving money on the table. the Profit an loss is similar to just selling your position and buying 2 leaps with the proceeds (for example, selling now for 85 and buying to Jan 2001 50 leaps for $41 each) Your goal for doubling the profits on the upside starts a lot quicker. At 91, rather than 130, your breakeven is 91 but below 91, you start losing real money at twice the rate.
WIth your position, you start to lose real money 1:1 anywhere below the current position, then you have a plateau (no gain, no real loss except potential loss of not doing anything) from (based on your prices) 70 to 100, your gains are 1:1 from 100 to 130, and above 130 your gains are 2:1.
Joe |
