LoD -- re:I bought 10 Sept 105s this a.m.
Now for the fun part. IMO, when you pay for time premium you should reap the rewards of time. (Other folks might say sell after earnings release.) Assuming good earnings/cc: my approach might be to retain the Sept calls and sell (short) Aug calls. The goal here is to lock profits on your long Sept calls, while letting profits run. [THIS IS AN EXAMPLE, NOT A RECOMMENDATION.]
Since you're holding Sept 105 calls, you could sell (covered) Aug 110, 115 or 120 -- depending on how things go. A possible scenario would be to sell (short) Aug calls on Wednesday afternoon, once DELL has (presumably) appreciated, AND while time premium remains. The "best" strike is anyone's guess, although IMO out-of-the-money calls make sense. (There's really no way to make a judgment until then-current bid/ask data is available.)
My success with similar techniques has been good, and in some cases has completely covered the cost of long calls -- playing with the house's money. BUT, THE ELEMENT OF RISK IS REAL.
As you've said, "YOU MUST DECIDE."
GT,
Alan |
