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Strategies & Market Trends : Tech Stock Options
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To: ViperChick Secret Agent 006.9 who wrote (33485)1/18/1998 10:52:00 AM
From: MonsieurGonzo  Read Replies (1) of 58727
 
Lisa; RE:" Straddles and Strangles "

I agree with you completely, dear grrrl - watching the premiums on the OEX bounce around is NOT fun. I felt very lucky to get in at ~12 and out at ~16 for the FEB 450 CALLs during the last upward movement. And like you, I think the DJX premiums suck. And again, like you, I don't want to allocate my entire net worth just to sell index option contracts - though I know this would give us a distinct advantage.

Take a look at IBM. It closed at 105 exactly ( perhaps the "pivot" of its trading range ;-), and is the most active of all the option-player stocks. Looks like one could sell the FEB 105 CALLs and PUTs for around ~8-3/4 and just sit on them, in a "straddle" - or execute a "strangle" and sell the 95 PUTs and 115 CALLs and sit on those until FEB expiry.

Another interesting tactic would be a Long Butterfly on IBM, which is an even less-risky way to execute the short straddle or short strangle for the 95 <105> 115 trading range.

-Steve
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