? about option strategy:
My current position: When NTAP was between 11 and 6 recently, I accumulated a large position (10% of net worth) in 03C20 and 04C15 LEAPs. With the stock now almost a triple off the low, I have a large paper profit. I would like to hold at least the 2004s, till 2003 (and possibly exercise them in 2004 for a LT hold, if I continue to like the stock). However, this very volatile stock has had a huge run, and I think there is a large chance of a stall soon, just below 20 (at the 200 day simple moving average).
So, how do I protect my gains, without closing my position in the LT calls?
I'm thinking of selling the January 20 calls. If we stall below 20, these ST options would expire worthless. If the stock breaks above 20 before expiration, then what? I've never done this before, so I don't know exactly how it works. I guess my choices are to wait till I get called, or close the position, by buying back the ST options (at a loss). |
