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Strategies & Market Trends : Systems, Strategies and Resources for Trading Futures -- Ignore unavailable to you. Want to Upgrade?

To: SE who wrote (38611)	10/25/1999 8:57:00 AM
From: Patrick Slevin	Read Replies (1) \| Respond to of 44573

Well, it's pretty far OTM and it's early in the month so it would be thin.... But I would think the Play is to Sell one Closer in, if I was going to do so. At the moment, the way to leg such a trade is to Sell the Call and buy the Put and when the market declines Buy a Call Further out and Sell a Put Closer in. Such a butterfly would be playing for the volatility to take the premium out of the options and even if your trade went too far North or two far South, if you legged in correctly there would still be a profit. But all that requires a lot of study and patience. However with your current setup if the Market tanks the only sensible Play is to just close out the put that you own. If you get a double or a triple or whatever, you aren't locking anything in, really, by writing further out. It's easier to just take it and run. If you wanted to, when you thought it had bottomed you could write closer in. But that's a completely different trade and you might be leaving something on the table.