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.

Strategies & Market Trends : Gersh's Option trades -- Ignore unavailable to you. Want to Upgrade?

To: Elmer Phud who wrote (72)	9/28/2004 7:26:21 AM
From: KB	Read Replies (1) \| Respond to of 652

elmerp, can you be more specific with your exit strategy? are you looking at the underlying price or the option value? do you consider time to expiration? i like the idea of a larger premium because of more time value, but i am new enough to the strategy so that i'm not yet comfortable with a particular exit strategy. i am currently only writing credit spreads from 3-6 weeks out to minimize the number of times i'll have to exit. i normally look to exit when the cost to close is 2x the original credit, regardless of the underlying's value or time to expiration. KB

To: Elmer Phud who wrote (72)	9/28/2004 11:31:04 AM
From: kaka	Respond to of 652

Elmerp, Re: Is this your intention if they should become ITM or do you just close them out and eat the loss? I think first and foremost I look at the trading range and expectiation from earnings, sentiment, analysts etc.. of the stock. Its much to follow about an equity; therefore while I play many option positions, its only for a few underlying equities. I presently have 370 short DELL calls open, of which 120 are covered. I'd be up a river if I felt like I had to roll all these if they were ITM. My knowledge of DELL and the way I traded these shorts allow me to repurchase more than half of them currently at .05 for a hefty profit. I'll wait and let them expire, or slowly begin covering. I also don'l look at each strangle or straddle as an individual entity. They are part of my profit picture which I firgure out from expiration to expiration. For October's expiration, I have short INTC puts @ 20 and 22.5. I'll most likely roll the 22.5's to April 20 or 22.5's. While those contracts will be a loss, that loss is more than made up by expiring INTC calls @ 22.5 and 25's. ALso am short INTC 20 puts. If INTC is trading just below 20, I might not roll, and just purchase the shares. I fully expect my many DELL 32.5/37.5 short strangles to expire worthless and add to the profit for the month. The closer DELL closes to 35, the better my 35 short straddles are worth. So I really do have an exit strategy, but it is very pliable depending upon the underlying and market conditions. Cheers, kaka