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Strategies & Market Trends : Advanced Option Strategies -- Ignore unavailable to you. Want to Upgrade?

To: OX who wrote (292)	2/1/2000 12:29:00 PM
From: tyc:>	Respond to of 355

no I don't think so Ox. I like to enter a straddle feeling a definite bullish bias. I simply am not familiar with bearish sentiment. Therefore, for me, I would choose just the position that Dell was in... i.e. oversold. And I would hedge the downside just as we did. All this is very subjective. You may recall that I told you about selling the stock of a covered call because my technical indicators said the stock was topping out. I didn't dare leave the deep-in-the-money calls naked. I neutralised the delta by buying o/m calls. That worked out fine in that the stock has dropped to within a point of the strike price of the short calls and I have now sold puts to convert them into a straddle. This is a bear straddle because the strike is below the current stock price. But even though the stock seems to be heading further south, I daren't pull my protective o/m calls.

To: OX who wrote (292)	2/1/2000 1:06:00 PM
From: tyc:>	Read Replies (2) \| Respond to of 355

Missed the second part of your question. Yes, the 50 day M.A. is a good pivot point. I have arrived at uncomfortable positions by failing to use it so. For example a straddle position has a strike price that is 2SD's above the 50day MA, while the stock is now trading well below the MA. Not at all comfortable ! I am bullish on the stock so don't want to hedge the deep-in-the-money puts, especially when the stock is really within a reasonable trading range as previously discussed.