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Strategies & Market Trends : Canadian Options -- Ignore unavailable to you. Want to Upgrade?

To: Steve Bevington who wrote (1465)	2/1/2000 2:01:00 AM
From: tyc:>	Respond to of 1599

I do agree that the high implied volatility makes selling options very attractive. Why just sell calls ? Why not grab what is offered by selling puts too (straddles). Keep an eye on the delta of the position and hedge with the common long or short when delta gets too high for comfort. That's what I am doing. Of course you must keep a tight rein on yourself to be sure you don't overload yourself.

To: Steve Bevington who wrote (1465)	2/1/2000 2:28:00 AM
From: tyc:>	Respond to of 1599

And having opened the subject of straddles, a discussion of the margin requirements might be of interest. It is my understanding that margin is charged on the side of the straddle that demands the most. The other side travels free, as it were. Now suppose the put side is in the money, and you decide to hedge by shorting stock. Theoretically, I would argue that you now have a covered put and margin should be calculated on the short stock plus the o/m call. I feel however that in practice in won't work that way. The brokerage house will want to charge margin on the in-the-money put and on the the short stock. This could gobble up margin pretty fast. I'm just theorising, but I wonder if anyone has had any experience of this.

To: Steve Bevington who wrote (1465)	2/1/2000 7:01:00 AM
From: Porter Davis	Read Replies (1) \| Respond to of 1599

>>why aren't there LEAPS available for BCE and NT? Good question. We have been approached many times by the Exchange wanting us to list LEAPS on BCE, but given the then-prevalent high dividend yield, low volatility atmosphere, we had no interest. Also, truth to tell, the 'regular' BCE options weren't trading like a house afire, either. Maybe now might be a good time to revisit this question, although we are constrained by the MOU between the participating exchanges from listing any new products before the reorganisation takes place. To my non-laywer's mind this seems yet another example of dubious, if not illegal actions taken by the previous management of the TSE. Or maybe restraint-of-trade has a different definition in Canada, just as the libel laws do, which I discovered at great personal expense and turmoil. I was very heartened to see several messages on the board this morning. Let's get it going again. I'm afraid I can't add anything to the client margin requirements discussion. Hell, my discount broker (whom I largely entrust only to hold my RSP, since they have proven largely incompetent in anything more complicated) doesn't even allow uncovered call writing. I will say that it takes a strong stomach to sell straddles/strangles. I don't even do it (intentionally) in my pro account. I always strive for the 'warm tummy' feeling. If my stomach starts to feel a little sour, I know it's time to take off some positions. Weird action yesterday in both BCE and BLD. Strong recoveries after early plunges. Truly awe-inspiring moves. Great trading opportunities. A lot of it was probably month-end mark-up. I hope everyone's had a few good cuts at these offerings. Maybe I'll have time tomorrow to talk a little about the "Nantucket sleighride" and the research I did into it. Happy trading. Porter E&OE