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Strategies & Market Trends : Swing Trading With Options -- Ignore unavailable to you. Want to Upgrade?

To: Dan Duchardt who wrote (31)	8/9/2001 1:41:06 AM
From: Dan Duchardt	Read Replies (1) \| Respond to of 88

BRCD again: My day started off with conviction that we were locked in a downtrend, and I ought to find a good short daytrade. Shorted BRCD rising into the 20 period moving average on a 5 min chart, a usual resistance area. Well that didn't work, but I still was thinking down, so I sold AUG40 put for some protection. BRCD came back the MA and bounced and my midset changed to.. "well it wont go down, and I don't think it can go up, so why not sell some premium and make some money while the market sleeps". Clever Dan covered the short stock and sold the AUG40 call to complete a short straddle. With the stock then slipping below 38, a wider profit profile started looking good, so I also sold another straddle at AUG35. Collected a total of $10.40 that would be worth $5.40 at expiration for closing between 35 and 40. The market woke up, simply sneered and that took a dive. AT 35, the breakeven point around $32.25 for this double short straddle (does it have another name?) was getting a bit too close for comfort, so I rolled the 35s out to September. Probably should have only rolled the put, but I didn't want two August assignments in the picture. At about 34, I rolled the 40 put to September, so at this point the only possible August assignment is the AUG40 call. When all was said and done, I had collected $15.70 that will be worth $10.70 at September expiration for any price from 35 to 40. The profit range is from just below 30 to just above 45. At August expiration, I'm pretty sure the AUG40 call will expire worthless (I'll buy it back if it gets below $.50) and I can leave the position unbalanced, pushing the upper end of the profit range to about 49, or sell a SEP40 to rebalance, and hopefully collect another couple of dollars. Not real happy about the early evolution of this thing in the first few hours, but I'm going to try hard to work it through. I can still roll the puts down if BRCD keeps slipping, and accept assignment if it comes to that. Hopefully we'll find a bounce soon and hang around in the 35 to 40 range for about 7 weeks. Dan