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Non-Tech : Invest / LTD
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To: upanddown who wrote (7450)2/16/1999 7:44:00 PM
From: Thean  Read Replies (3) of 14427
 
John,
What you said is correct, except that I would sell another put 6 months out at the same strike price to help pay for the one I need to cover if the underlying does not move above the strike price by expiration.

However, in the case of RIG, if the underlying moves to $26-29 in the next 30-60 days, I would take profit and probably book 4-5 pts of gain by selling Aug 30 put. This is just a more conservative way to play if one wants to go long and is willing to wait for the bounce. This way, if the bounce does not materialize within the 6 months period, one can roll over for another 6 more months and collect the time premium as a consolation price. This is a good bottom fishing strategy especially if one thinks the bottom may not be over yet but don't want to miss the boat either.

I would not use this strategy for short term trades.
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