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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: RockyBalboa who wrote (14919)	10/29/1998 11:15:00 AM
From: Marconi	Read Replies (1) \| Respond to of 18691

Hello Christian1310: How much $$ is the initial margin requirement for the short calls when I do 20 contracts of a reverse combo (sell 20 call 120, buy 20 put 120) I think I have the standard 30%. If you are expecting downside with the combo, why pay the premium for the put (if short term)? Instead why not write more out of the money calls at perceived near highs in stock price? I evaluate this month by month and have been writing successfully so far. If longer term for an anticipated big drop (of much larger than the $10+ premiums, then the premium would expect to be swamped in the price move. I have done this for 9 months out. Have not looked at the LEAPS yet. I apparently flipped into some January LEAPS last night, and at first thought they were Jan 99 options, and thought they were YIKES! Selling calls and buying puts roughly doubles the leverage of a price moves, with some 'sweet spots' possible with the nonlinearity of the options pricing with respect to underlying stock price for near money options. From my experience, a cushion that can meet the more recent highs is necessary (130-140). Have you considered buying and selling deep in the money calls or puts with near term expiration as a proxy to the underlying stock without tying up the full capital? It would seem to make sense for traders to consider. Watch open interest and trading volume--and choose a reasonably liquid vehicle. This is something I have not done, because I generally do not try to day trade. I wish you well in your trading. Please let us inform us what you decide to do and how it seems to be working. Best regards, m