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Strategies & Market Trends : Option Spreads, Credit my Debit -- Ignore unavailable to you. Want to Upgrade?

To: jjs_ynot who wrote (2295)	8/24/2003 8:19:52 PM
From: Vol	Read Replies (1) \| Respond to of 2317

By exit strategy I meant a predetermined gain or loss in the position at which time you buy back the naked options. Let's say you sell a Jan05 strangle on XYZ (call and put at different prices). Would you hold until exp in Jan05 and buy back any ITM option at that time? Or would you buy back the strangle if the options had lost enough value that your profit met some predetermined %age? Or would you buy back the position if the put or call became too much ITM for a predetermined loss? Using Allen's example of selling AMR call/put combinations 2005/25/2.5 for 2.30. Is this to be held until Jan05? What if AMR stagnates, volatility dries up and the combo drops to 1.5? Do you buy back the combo for a nice profit and move on to another trade? What if AMR goes up such that the call price rises - do you buy back the combo for a predetermined loss? Or do you follow some repair strategy?