HI Brian: Glad you made me do some more thinking, ought to call you
Brain instead of Brian <G>
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As you said:
<Granted, this is worst case scenario, but should it happen, are you not back to ground zero (including commissions)? Here, is what i think you said...
bought FEB 40 PUT @ 3 / sell value is around 7 / profit =4
bought FEB 32.5 CALL@ 3.25/ sell value is 0 / profit =(3.25)
unless this dog moves out of your range (40-32.5) your profit is 0.75 less commissions? In essence, you're now banking that she WILL move out of this range?
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OK not banking "but hoping" and it's a "see-saw," no money to be made with the insurance (3.25) , I just had to check the prices as I read you letter, because you make a good point..
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If I would exit both positions just afew min ago,
the puts = 4.75
the call = 5.625
total= 10.375
sub ins (3.25)
bal = 7.125 which is just a little more than I would have
got the other day, never counted on making any thing unless she
moved out of the range as you said. On a day were it moves fast,
the one going up generally goes up faster than the other losses
value, (the way the herd is, fast to buy on momentum going
their way, and slow to sell when it goes against them.
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If I'm careful how I exit, sell the one losing first, and do
it on a day they are moving fast, I'l gain a little..but the above
was if I exited both at same time today..if she goes flat I don't
want the febs..but as long as she is moving a lot they will see-saw
worst thing on ex date..if I stay that long I can lose all value in
one..and cash the other in for 7.5 , that I will try to avoid..as
thanks to you I can see it would eat up my gains. as I would have
6.25 in them both..and would not be happy with myself to get
just 7.5 hmmm..well that's one reason I posted it.
Hoping Mike would point out my flaw..if he saw it, sure glad you did, I'll have to watch them both a lot closer now ! Just when I thought I could relax and let her do her thing. <G>
Right now I'm Ok, but what if I had held and not bought the calls,
I'd be down 2.25 of it already..just with this so called settlement
today..Mike warned me about that jazz..and he was right too..
all in all your right and got me back on my toes, it will see-saw
but not exactly as well as I thought..yet I may take advantage
of a real big move outside the range; if it comes. If I see the
combo value drop below 10 I'll exit feb the best I can.
Like I said this is my first venture into having both puts and
calls on the same stock, just to think had I not hedged it,
but sold the puts and bought the calls, I'd be even more
ahead, that was my first idea, but I canceled it for the hedge,
hoping she would go outside the range and really dump, guess
I should have known they would come up with some phoney settlement,
but so far I'm still holding my own.
Thanx for prodding me.
Jim. |
