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Strategies & Market Trends : Options 201: Beyond Obi-Wan-Kenobe
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To: jt101 who wrote (707)12/6/2002 5:45:29 PM
From: Dan Duchardt  Read Replies (1) of 1064
 
You might take a look at an ATM to slightly OTM OEX call to protect against the runaway. One per ES is just about right since OEX is roughly SPX/2. Looks to me like they are cheaper than using ES calls, and about what you got from selling the puts, so you could still have a net positive premium and not have the cost of rolling the puts.

I have not looked at it in detail, but it looks good at first glance, especially if you can catch a dip next week. In fact, the longer you can wait the better at this point if the market cooperates for you.

Of course with your 2:1 ratio there is some downside risk, but 870 seems fairly safe at the moment.
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