Gambler, I don't follow the numbers very well at expiration. I can understand the Jan 2000 call, but why would $80 stirke price puts be worth $6 if the stock is at $78 at expiration? Anyone who is buying for more than $2 needs a lobotomy. <G>
Basically, I don't like the trade. You have to be right on a very volatile, popular stock, which I also happen to think is very bloated in price, to make a little on the long puts. But you are risking infinity on the short calls. That is something I absolutely can't hack in my own portfolios.
Basically, on a naked call, the broker is required to hold the option premium plus 25% of the value of the stock, less the out of the money amount and less the premium, marked to market daily. That is much less than $25,000. In reality, you are only putting up margin for the short call. The broker's margin clerk is probably having a coronary thinking of how Intel could double before you could cover, so he is asking quite a bit. But the truth is, it is a high risk trade and I don't think you will get a much better deal unless you have a very large account. Those margin deals for LTC are not going to be offered to you.
MB |
