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Strategies & Market Trends : Calls and Puts for Income -- Ignore unavailable to you. Want to Upgrade?

To: pcyhuang who wrote (979)7/21/2007 10:29:51 PM
From: Bridge Player  Read Replies (1) | Respond to of 5891
 
I suggest that you take another look at your calculations.



To: pcyhuang who wrote (979)7/22/2007 1:05:46 AM
From: Robohogs  Read Replies (1) | Respond to of 5891
 
PC -

I may be missing something, but there is no loss to stock going over 27.50. You have sold an expensive put and bought a cheap put for a net credit, and with stock above all strikes (20), you make maximum profit from there (20) to infinity.

Jon



To: pcyhuang who wrote (979)7/22/2007 7:46:32 AM
From: dealmakr   Read Replies (1) | Respond to of 5891
 
Another additional risk is that there is not really too much time premium on the 20 strike. You face the chance of an early exercise on your deep in the money short option during a volatility spike on the underlying. The way this stock is trading with the underlying fundies in trouble, this play could be very risky IMHO.

dealmakr


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