ild, Yeah, I think there are a lot of similar ideas in the financial area, with Freddie Mac, Fannie Mae, MBIA, AMBAC etc. topping the list. Also Citigroup.
The reason they don't have new JPM calls is that they are not allowed to list them until the stock hits some magic numbers for several days. It is stupid, but that is the way it works. I bitch about this all the time, on the upside and the downside.
I sold my calls on tbix as it didn't rally as much as it should have and I cut dead wood pretty quickly when I am going counter the long term direction.
On credit spreads, bull or bear, I usually put both sides on at once. Since I usually do very large spreads between the short and the long, my positions are basically a short option with an insurance policy as opposed to narrower spreads where you play the differential.
Wide spreads. There are two answers, depending upon what you mean. If you mean wide bids to offers on the individual options, I usually put in a spread order. In other words, if the $100 strike price Leap is at $30-31 and the $120 at $20-21, I might put in an offer of $10 on the spread. That would allow the MMs to squeeze out a profit without forcing me to pay the vig on both sides. Of course, you need a broker who knows what he is doing, so I do most of these with a full service broker. The discounters will take the order, but always come back with a "nothing done."
If you are asking how I manage a wide spread between the sold option strike and the long options strike, it depends on how the thing does. If it goes straight down, which is what I am hoping, I simply sell the short side and decide whether or not the long call is worth punting or more fun to hold for a dead cat bounce. I usually take off the entire spread, but not always. If the stock goes up rapidly, I am often able to unwind positively as the out of the money takes on more pure premium. Or, at least, the mistake doesn't hurt much. If it stays flat, I bite my nails. <g> In general, the issues I use don't stay flat, and that is when I have my worst returns. |
