Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: Epinephrine who wrote (37907)	4/30/2001 6:03:24 PM
From: maui_dude	Read Replies (1) \| Respond to of 275872

Epinephrine, Re : "I would still be on the right side of time value since every day time value would be ticking in my favor." I thought I'll share my observation with you. The time value degradation almost entirely happens in the last 6-9 months before expiry. So, if I were considering selling puts (or writing calls for that matter), I normally choose to do about 6-9 months out (of course, the risk being, that you can then get caught in a short-term draft). Maui.

To: Epinephrine who wrote (37907)	4/30/2001 7:06:54 PM
From: bacchus_ii	Read Replies (3) \| Respond to of 275872

RE redbird :"Sell 100 Jan 2003 $30 Puts (now $9.20) and buy back 100 Jan 2003 $40 Calls (now about $9.00). " I don't catch it! The Jan 2003 $40 Calls was covered call while the Jan 2003 $30 Puts are not covered (other than by a lot of cash, but if the selling of CC was to cover margin call, I presume that your account do not provide big cash reserve). Gottfried

To: Epinephrine who wrote (37907)	4/30/2001 10:06:00 PM
From: Joe NYC	Respond to of 275872

Epinephrine, I am not sure how you can improve on the position, unless you really want to trade in and out of the stock. With what you have, if the stock goes down, the call will go down as well (slower than the stock, but you are somewhat protected. If the stock remains the same, the time will erode the value of the call over time. If the stock goes up, for every increase of the share, there will be less than $1 increase in the price of the call, so your asset will be rising quicker than your liability. If it gets to say $50, most of the call premium will be gone, and you can dispose of the position at basically $40 (minus some transaction fees and spreads). Joe