SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : A.I.M Users Group Bulletin Board
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: OldAIMGuy who wrote (6776)2/5/1999 5:39:00 PM
From: D VanSwol  Read Replies (1) of 18928
 
>> What happens if the price of the PUT option closes at or below $55 in June? Well I still keep the $1150 but have to buy 200 shares of stock at $55 to cover the contract obligation. So what's my actual cost per share? Let's see. I pay $11,000 for 200 shares of stock plus normal commissions - let's use $50 for this example. My cost is then $11,050. Wait a minute, I also took in $1150 in "insurance premiums" before this. So, my net cost is $9,900 or $49.50 per share! I've just made a buy at about 10% less than I would have otherwise.<<

So if the stock closes below $55 you go ahead and buy the AIM directed shares whethter or not the PUT shares get called?

Are you in effect selling naked PUTs since you don't yet own the shares you plan to buy at $55 IAW AIM?

I've traded options (on the buy side), but haven't written options on stocks I own. I understand the basics of the mechanics trading options, I just wasn't sure how to execute the writing of an option on shares I own.

P.S. This writing of PUTs or CALLs sounds a little like a variation on the use of stops rather than using Vealies.

--Dennis--

Edit: Tom - I've been mostly lurking of late because I usually so behind in reading posts, I feel that when my response gets posted, it would be too far out of context with the conversation at the time my post would finally show up.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News