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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study! -- Ignore unavailable to you. Want to Upgrade?

To: Herm who wrote (11270)	7/21/1999 1:03:00 PM
From: tuck	Read Replies (1) \| Respond to of 14162

Herm, I've got to admit I did not look at the volatility of Edify when buying the puts. At the risk of flogging a dead horse, time and volatility are both factored into the derivation of delta (see McMillan p458). That said, it doesn't seem to be working in this instance, does it? I've been tracking the the moves of the next upstrike, the August 15s. Had I bought these puts, ITM from day one, I'd have made a little money. Now I'm trying to break even. The consensus 20-20 hindsight seems to be that one should buy ITM puts, though these aren't going to be cheap. I fear I haven't been paying attention to your sideshow examples closely enough to remember if you have a rule of thumb about this. You mention "cheap" puts, but do you buy 'em ITM or OTM? Do you have rules about voolume and OI? Cheers, Tuck