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Strategies & Market Trends : Option Spreads, Credit my Debit

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To: KFE who wrote (2263)	7/22/2003 2:50:45 PM
From: Allen Furlan	Read Replies (3) of 2317

Ken, re selling naked puts. I agree that this is not a strategy to acquire the underlying, however IMO the evaluation of the stock as a possible acquisition is an important consideration in taking a position. I recently sold sgr 2005/5 puts for average price of 1.10. I believe that sgr is well worth 3.9 but my expectation is that I will pocket the premium. In the meanwhile my $80 in margin is supporting a $110 "investment" Should the margin requirement go up( stock rises) my position becomes more secure. I have a hard time accepting the notion that trading options should focus on the option value (beta/gamma crap) I have been very successful in exploiting special situations when I believe that options are priced on an mistaken notion of volatility rather than underlying fundamentals.For example this week I sold AMR call/put combinations 2005/25/2.5 for 2.30. AMR may still go belly up but my risk there is only 20 cents and I just do not believe that AMR will return to 25. In the meantime I am supporting the $230 intake with about $120 of margin. I have quite a few options short on DAL 2005/35 calls and CAL 2005/5 puts. Thesis here is that airlines are in funk for next several years but that cal is superior to dal. I took on quite a few positions on energy traders(put/call combos)early this year. MIR is a loser but the others cpn,dyn,aes,ep are profitable so far. Sometimes option traders are just plain clueless. I have sold 300 cmrc 5 calls (khdaa) over the past 6 months at an average price of .18 This is a 1/10 split option and becomes a problem only if cmrc goes from 3 to 50 in six months. Tied to do same with 1/6 pcln 15 calls but could only get 40 off. pcln has to go from 24 to 90 in 18 months for this to be problem. Another theme is arbitrage, for example cci long and amt calls short last year. Also a strategy is ratio writes against stock or nearer the money option. Have quite a few nvls,qlgc and rmbs positions of this sort. None of these strategies focus on volatility but of course the premium has to be worth the trade. Would love to hear of any other "vulture strategies" the board might know of.

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