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Strategies & Market Trends : Advanced Option Strategies

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To: OX who wrote (354)	10/8/2001 6:49:19 PM
From: tyc:>	of 355

Thanks Ox; your comments are always appreciated. >>I would be loathe to do <ratio writing> w/o thorough understanding of your possible exits. My point, Ox, is that I do not intend to "exit". My intention is always to allow the options to run to expiry and be exercised (or expire worthless), leaving me long or short the stock against which I make another ratio-write of puts or calls as appropriate. I think the strategy will be viable if I could recognise a trend early to allow an early hedge. It would be almost like swing-trading with the short straddle in the background. You may recall my straddle on Power Corp that I nearly dumped and you persuaded me to hang-in... I am still "in". At the last expiry I allowed the call-side to be exercised leaving me short the stock, against which I wrote (ratio) puts. The Sept 11 came along and it tanked, but I wasn't worried cause the worst that could happen is that I would end up long a few shares .. If it trends up I can hedge by buying (back) one of the shorts; if it trends down I can (if I want) hedge the downside by increasing the short. Whether you have a ratio-write with shorts and puts, or ratio-writes with longs and calls, or simply short straddles, the profit profile is the same, and it is very attractive. In contrast to that I have been running a straddle on a very volatile tech (C-mac). The stock climbed high so I hedged the upside by going long the stock.... and like a fool I turned into a bull. The stock turned and dived but I didn't sell my bullish hedge.... UNTIL IT BOTTOMED !! I'm still in the straddle... it expires October and with my experience behind me I intend to allow the puts to be exercised. As a matter of fact, because I interpret that a bull trend might be starting, I have just bought the common ten points above what I sold it for at the bottom...Hah ! As you are continuously writing combinations on the Spoo (?) this must bear some resemblance to your strategy. ? I esteem your experience and objectivity, and would welcome any further comment.

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