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

To: RockyBalboa who wrote (15178)	11/8/1998 4:25:00 PM
From: Vol	Respond to of 18691

Christian, Re: AMZN straddle Some friends of mine have considered different plays. A weirdo is to sell AMZN P130 Jan 2000 and C120 Jan 2000 leaving you with $110 premium and an ITM of $10 at the minimum. For additional security, cap the strategy with a cheaper $150 call. It ties up some equity namely the margin to secure an AMZN breakdown below $20 and money for buying OTM calls. They expect it to pay off $50-80 which reflects terminal prices between $70 and $180 where the distribution is more dense at 100-150. More than one year is far to go but it is not implausible. The straddle loses 60% of its value in one year based on a steady implied volatility. Sounds like a viable strategy, 2 problems though: 1) The premium is 89, not 110, for Jan00. Maybe he meant Jan01; the premium then is 114. 2) There are no Jan00 or Jan01 150 calls available. 130 is as high as they go. There are Apr99 150 call for 17.5 ask. Guess you could roll them out if/when the Jan00 150 call becomes available. Vol