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Strategies & Market Trends : Advanced Option Strategies -- Ignore unavailable to you. Want to Upgrade?

To: Vol who wrote (76)	7/27/1998 7:54:00 AM
From: Joe Waynick	Read Replies (1) \| Respond to of 355

This stk will require a "wait and see" approach. The idea is to develop a systematic approach to investing. I don't want to get wrapped up in trying to predict the direction of the stk. I want to profit whether the stk goes up or down and still be able to sleep at night. I'll continue with the plan (cover my short), until the close on Tuesday. However, at that point, I will wait for earnings and watch for a dramatic move in the stk. 1) At what price will you go long or short, and at what price do you then sell or cover? 1. No cover by Tuesday, stk tanks, immediately sell long call for at least $2 and ride put and short stk down to at least $20 for $11k profit. 2. Cover by Tuesday, stk tanks, immediately sell long call for at least $2 and ride put down to at least $20 for $7k profit. 3. No cover by Tuesday, stk pops up, immediately sell long put for at least $2, cover short at the market on Wednesday morning, (anything below $28.50 will earn a profit), and ride long call up to at least $30 for a $3k profit. 4. Cover by Tuesday, stk pops up, immediately sell long put for at least $2, ride long call up to at least $30 for a $7k profit. What is your repair action if the stock tanks after you go long? The straddle protects me on both sides of the $25 strike. What if ONSL just hovers around 25? Possible, but not likely. This is a highly volatile stk with a long history of wide price moves. Perfect for this type of strategy. Besides, my straddle is good until December. I can wait, but I doubt I would have to wait long. Remember, I only need three trades to play this stk risk free for 6-months.