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

To: dealmakr who wrote (5142)	6/17/2012 9:11:20 AM
From: CommanderCricket	1 Recommendation Read Replies (1) \| Respond to of 5891

dealmkr, I'll post a few option trades as the Aug option opens up. SI needs a good option thread for us option traders and I'm willing to contribute what I can. Current open positions are. All positions are naked unless noted. Larger positions IOC short Jul/Sep 55 puts IOC short Jul 65 calls (covered 1/4 of common) . Plant to straddle these with short Jul 65 puts if IOC continues moving higher. IOC long Sep 60 calls SD short Jul 6 puts, Sep 6 puts CIE short Sep 22.5 puts, short Oct 17.5 puts CIE short Jul 25 calls (covered) WLT short Jul 40 puts UAL short Jul 25 calls Michael

To: dealmakr who wrote (5142)	6/17/2012 1:42:25 PM
From: Jim P.	Read Replies (2) \| Respond to of 5891

I try only to trade stocks that I think I can understand the intrinsic value with a margin of error for accumulating wealth. When I have enough wealth I am going to change my investment style to protection of wealth. Options are a great tool for me and your posted trades are similar to my SD trades. I also use leaps when I think something is undervalued. I sold Jan 2014 30 puts for $10.80 on ATLS in February this year and purchased 2x the number January 2014 25 calls for $5. Options now carry 100 shares of ATLS plus 10 shares of the spinoff ARP. After the stock spiked I sold January 2014 ATLS calls with out the ARP shares strike $45 for $2.55. I put a cap on my profit but increased my potential return since I have a less capital tied up. If the trade is as profitable as I think it may be I might have a $200,000 profit in 2 years for limited amount of margin tied up. The interesting part of this trade is the limited liquidity on the option series and the fact that it is an MLP. The bid ask spread is terrible right now and I am in a lot of ways stuck in the trade. I expect the bid ask to narrow some but not to any attractive point for to close out the trade. I want to end up with long term capital gains on the LEAPS. The way MLP's track cost basis if you are not aware is that the broker supplies the cost basis to the MLP. I had a go around with Schwab account I let some options exercise to buy APL and Schwab reported the cost basis as the option strike price. On any other stock trade Schwab would have rolled the option premium into the cost basis. I was able to correct this at the MLP level fairly easily and held the MLP another 12 plus months so it turned into a long term gain. I am afraid with this series of trades that if I let them exercise I am going to be stuck with the same problem and really would rather do a straight option sell and have a clean tax return and records with long term capital gains. My solution if the spread remains large is to sell the same options covered in my IRA for the series and when I want to close out the trade collapse the ask by placing a sell order in the taxable account and if it does not trade to hit it with by closing out the trade in the IRA. I will likely wait until the end of 2013 to close out the trade. I realize I have posted information regarding a very specific trade strategy that may or may not ever apply to your situation. Hope there is something useful in it. The important part of the trade to me is that I spent a large amount of hours studying the company ATLS until I was fairly certain that the stock was very underpriced and the LEAPS at a then 20% of the stock price for almost 2 years of time value presented a large profit opportunity. Selling the puts funded the trade as I just hate paying for time value. Would rather be selling it. Not sure if I will maximize the profit at the $45 share limit on calls I sold or if bad timing will lead to a losing trade in the time left. All about timing. jim