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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study! -- Ignore unavailable to you. Want to Upgrade?

To: Vol who wrote (9271)	12/18/1998 12:30:00 AM
From: ed c.	Read Replies (3) \| Respond to of 14162

Volunteer, <<I am trading a sort of hedge which combines the concept of covered calls, ratio spreads, and vertical debit spreads which enable me to profit almost no matter what direction the market goes. >> <<Sounds complex. Mind fleshing out the details and giving an example? How did you come upon this mix of strategies?>> Yes, its very complex. I'm probably going to confuse the hell out of a lot of people but here goes anyway. 1. I wait for the VIX to get pumped up, then I'll buy a ratio spread (usually 1 by 2) as wide as I can get it. I try to get it for even money or a slight debit. For example, I bought 1 1170 Jan S&P 500 future put for every 2 Jan 1110 puts I sold. That trade alone, if done for even money, has no upside risk, but will make a bundle if the market goes south. But be ready to adjust and allow for plenty of excess margin because you may need it. At the same time, I'll sell slightly out of the money puts for a credit. Know I'm sitting pretty. I can profit in any direction. If the market starts tanking, I'll roll the puts to a lower strike and probably martingale them (that is sell twice as many as originally) to continue with a credit. And at the same time, I'm constantly on the lookout for buying deeply out of the money vertical debit spreads as cheap as I can get them to help with margin and prevent major losses if the market goes in free fall. ed