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Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: CuttotheCore who wrote (6644)8/13/1998 5:25:00 PM
From: EPS  Respond to of 22640
 
Robert,

Say for example your cost for 1k shares of TBR is 110. Say your are considering the September expiration. You could buy 10 calls at strike price 110 and sell 20 calls at strike price 115 (making sure you get some *credit* for this move). At expiration: If strike price < 110 nothing happens as the calls are out of the game, if between [110, 115] your profits DOUBLE, if strike price bigger than 115 then your profits are reduced by the hedging but you still win.

Victor


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