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Strategies & Market Trends : Three Amigos Stock Thread -- Ignore unavailable to you. Want to Upgrade?

To: Sergio H who wrote (8031)	8/23/1998 8:15:00 PM
From: browser	Read Replies (1) \| Respond to of 29382

soss $19 target $25 at the time july 20 i believe there were strike prices for: aug sept nov feb ibd doesn't cover soss everyday must not trade often my question is out of all these cycles why was feb. picked? is there a mathematical formula to be used to arrive at best month? love to have a thread called " option analysis" you guys interested in hosting this!!! thx rc

To: Sergio H who wrote (8031)	8/23/1998 10:40:00 PM
From: Sal D	Respond to of 29382

Sergio, as usual you bring up some very good topics for discussion. It is late already for me tonight I will get back to you Monday or Tuesday. Joe

To: Sergio H who wrote (8031)	8/25/1998 7:14:00 PM
From: Sal D	Read Replies (2) \| Respond to of 29382

Sergio, more fun with options, although the buy stock and write straddle approach IMO is best used as a income oriented approach in a neutral market forecast lets look at it anyway since it is the most interesting. We will use our SOSS model and see what could happen. We are assuming we originally purchased 300 shares at $19 ($5,700) and the current price is 15 7/8. OK I sell 3 Feb. 15 calls @ 3 3/8 for $1,012.50 and I sell 3 Feb. puts @ 1 13/16 for $543.75 If the stock price is above 15 at expiration the putt expires and the call is assigned. My situation is this: From the sale of the stock = $4,500 (300 x 15) From the sale of the calls = $1,012.50 From the sale of the puts = $543.75 Total = $6,056.25 Total profit $356.25 after commissions I made a very small profit and am out of my position. However with any price above 15 the same result is found $6,056.25. The putts expire and the calls are assigned. So if the price of the stock is above $15 but less then $19 it was a good idea, but if the stock is above $19 it was not a good idea. Now if the stock is below 15 at expiration, the calls expire and the puts are assigned. As a result of the puts being assigned I must purchase an additional 300 shares at 15 ($4,500). My resulting position is long 600 shares and $1,556.25 cash (the $1,012.50 from the calls and $543.75 from the puts). My situation is this: 300 shares at $19 (my original purchase) = $5,700 300 shares at $15 (puts purchase) = $4,500 Minus $1,556.25 (the premium received for the puts and calls) Total = $8,643.75 or a $14.40 cost average on my now 600 shares So if the price of the stock is 14 1/2 I could sell and basically break even, anything below 14 1/2 I'm at a loss. At $13 a share I'm basically back were I started down $900, anything below $13 I'm in a worse situation then I started. There is one more situation that could happen that is the stock is at $15 on expiration. We then assume the putts and calls expire and I keep the $1,556.25 premium money. My situation is this: Im still down $1,200 on my original stock purchase but the $1,556.25 gets me a small profit after commissions. Assuming all this is correct, the above is only for example, comments from anyone are welcome. Joe