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Strategies & Market Trends : Canadian Options
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To: Dave.S who wrote (1351)4/21/1999 3:04:00 AM
From: Dr. Godless  Read Replies (1) of 1598
 
Sweet trade, Dave. You wouldn't have to wait until Oct. for profits either. A return to more sober and realistic IVs like say, 120% <vbg>,(the highest YHOO ever reached), could bag you some good money pretty quickly. For some reason, the Oct. 22.5 call has an IV about 8% higher than its neighbours. If you sold that instead, you could knock your breakeven out another $2.30, with only a twenty cent hit to your maximum gain. I wouldn't really expect the asymmetry to last very long if at all, but since the real risk is that this twisted stock will double again or worse, it seems to me prudent to stretch the straddle into a strangle on the upside. Anyone agree or disagree?

Has anyone done comparisons between the profitabilities of straddles and strangles in terms of areas under profit curves at expiration? Is that a meaningful way to look at them? I'd love for someone to save me the work of writing a program to measure these things.(Especially if there's some obvious general answer I just can't see.) ;)

Welcome back, Porter. You're back two days and already there's been more real discussion on the thread than in the preceding six weeks.

Do you know Montreal very well? I'll happily trade knowledge of the sweet and wonderful secrets of this fair city for a little of your hard-won options savvy.

Doc
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