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Pastimes : Ask Steve
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To: hpeace who wrote (920)2/23/1997 6:49:00 PM
From: tdk   of 4749
 
hey steve. On your options strategy after you buy the stock, write the covered calls, you wait patiently to enter your strangle position. What if you execute 1 and 2 and the very next day the stock takes a 10-15% hit (I know, then look to buy the call), but what happens if the stock takes the hit and then stays 10-15% lower for the duration, until options expiration, or if it just continues to go lower. Will you be buying upside insurance (ie upstrike calls the whole time?). if you do and the stock remains at these lower levels then the only thing you receive is the premium and call contracts (insurance) which expire worthless. Is this a correct way to look at this? I am sorry if I am asking stupid questions, however, I am just trying to understand the concept.

Thanks in advance for your reply. tdk...
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