UF,
re: Doing a buy-write on an uptick isn't the classical approach, John. Are you trying to establish a position in sebl?
I already have a large position in SEBL, but if I end up adding to it as a result of this trade, I won't feel uncomfortable.
Actually, it's not a bad strategy to wait for an uptick to do a buy/write, it's better than being under the water immediately. I bought the stock, waited about 15 minutes, and then wrote the calls. It saved about .25 on the stock, and added about .10 on the short calls. But I don't recommend people do that, as things can turn on a dime, and you can end up chasing the calls down, trying to sell on the bid, and losing return by the minute.
My guess on SEBL is that it is in the process of putting in a bottom. I suppose SEBL could trade as low as $19, but I expect it will be in a range of $22 to $25 for the short term. By expiration I expect it to be higher. Could be wrong on any or all of that, as you know it's a best guess.
The major factor for the trade was that I don't think SEBL will go and/or stay below $19, and I can still have a profitable trade if it does, by rolling down the strike. I could have tried to wait for what I expect to be the exact low, but I'm not that good. I think at this price the probabilities are in my favor. That's what I look for. If I tryed to wait for the perfect trade, I would seldom do anything.
I've never posted a trade on a thread before, it's an interesting exercise to justify it. Educational.
John |
