Hi Brian: Here's my take on it using the same numbers again,
BUT WITH CAPS USED TO SHOW WERE I ADDED COMMENTS not to mean I'm
shouting.
> the puts = 4.75 <income> THIS WAS 7 and my 3 was in it.
> the call = 5.625 <income> AT time of buy this was 3.25
> total= 10.375 <total income> ( and that's insurance not to )
> sub ins (3.25) <expense> ( looked at to make profit )
( but to give you a shot at a big hit or fall and limit risk)
> bal = 7.125 which is just a little more than I would have
> got the other day, ( IT's a see-saw ) unless it goes out
( side the range, the 3.25 is not
( really expense but ins money I get
( back "IF" I exit before the total goes (below 10.25..and I give myself a little
as the day they sold for 7 I would have
only got 6-7/8 market maker take 1/8)
you can bet on that.
<Did you forget to include the expense of the original puts at $3? which would reduce
that current 'snapshot in time' profit to
4.125 (=4.75 + 5.625 - 3.25 - 3). Also, are you looking at the option price or the bid and ask? Sometimes bid or ask can differ from posted price by 1/2 or more.> ( NOT OFTEN ON OPTIONS BUT can happen yet 1/4
and 1/8 more often does, on options..
The only reason that I ask is because I am somewhat new to options and am looking for reliable methods to limit my risk. When you mention locking in put profits with call purchases after the price drops, i am intrigued-however I cannot find any "affordable"
calls that do not eat up my initial gain from the puts. thanks again,
-------------------------------
Well going in is the real risk, if she goes against you, but track
the calls and puts, at some point if she comes your way, were you
think gee wiz I got 100% here..better sell, well then look at how
much so and so call dropped in price..get one that dropped about
as much or more than your's went up, ( dollar wise ) like it takes
some digging as they are all dif, demand wise..in some cases you
may buy 2 calls for ever put you had, or only half as many,
like say you went in puts spending 1500, ( AT THAT TIME what calls,
and how many could you buy for 3000 ) when the 1500 gets to
3000, the 3000calls are about 1500, ( less time premium ) now not
all of them have the same supply/demand..it can be harder to sell
were there is not much open interest, so look at that too..it's a
lot of work, and you can miss em..so I spread out..you need stocks
that go up and down a lot..to do much good..I'm watching,
ADBE..have calls, and PSIX I have not looked to see if she has
options but if she does at this point I might buy calls..she jumps
a lot..USDL looks like it might be making a top..but here again
I have not cked them out enough to jump on them and don't know
if I will, if cym slips just a little more I may take calls on
her,..that's not a big play..but she is low..and copper prices
will effect her and ar, I was in and out of ar several times
this year..not for big moves mind you, but when she is low,
I watch her and the price of copper..( it's really a way of playing
copper with out buying it ) now the moves are not much but the
cost of the calls ( premium ) over there is not as much either
with these tech stocks there is more movement but more premium , and
more risk..I don't bet these things with a lot of my money,
I'm long in bonds, and a closed end fund, and play a no load fund
family..( specialty funds no load..) were you can switch from
one field to another. They don't like it too much and try to talk
you out of it..and limit the out/..back in to once in 120 days,
to any one fund..(T.R.Price. has nice family ) but no gold fund, but you can switch some, and I don't think real growth funds that are spread out all over give that advantage,
like if the market dives..instead of me rushing into gold, I use
to would get the mining cos; like I do with copper..when it's on the
rise..but with the gold..( very depressed right now..I would not
get the mining cos directly but a fund that specializes in gold
cos..he knows..better than me..so that makes me a switch hitter,
I'm looking at some Jap funds now..and may look for a lot longer, but sooner or later they will take off and beat this market,
the dollar is high right now and buys a bargan when you put it
in a Europe fund, I picked up some FAX yesterday..with the dollar
high I figure I get a bargain there..if you see the yen start to
make a come back, you will see Jap Stocks rise..but don't hold
your breath, any way these are things I look at..if you trail
back my letters in August you will see I was talking oil..man the
price of oil went up..way before the stocks did..but like some
of the boat cos..have 3x since then..too late now..if oil falls,
it will take a while but those same cos will be good puts..
but not now..if you want some urls for stocks;
click on > republic.net
I'v put my page back up..after your there if you click on front
you will see it all ( which is not much )
e-mail me and I'll e-mail you back how I trade..at a discount,
over the net. I'm afraid if we get to many people the server
will slow down..they just put it up not long ago..and it's not
fast , well sometimes it is.
Jim,
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