Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Advanced Option Strategies -- Ignore unavailable to you. Want to Upgrade?

To: Ted S who wrote (236)	1/14/1999 5:42:00 PM
From: Greg Higgins	Read Replies (1) \| Respond to of 355

Ted S writes: A couple of questions: 1. What kind of calls you use: out of, at, or deep in the money? I like deep in the money calls for the long side, at the money calls for the short side. I want to pay for as little time as possible, and I want to sell as much as possible. 2. How do you bail out at expiration (if the call is in the money)- sell the LEAP and buy back the calls? Or do you convert the LEAPS? Hmmm. At (or near) short expiration I roll the short into a new month. The longs get rolled when they become DITM for some future year; this is tax sensitive. 3. What is your average ROI from this strategy? All of my early plays were spread over 3 different brokerages and I don't have the numbers. I've got some plays working now, but it's much too early to measure ROI. <4>4. Is the downside protection of the LEAPs better than holding the common stock? Some people seem to think so. I believe it is for DITM. If I hold a $30 strike for a $60 stock, then even if the stock returns to $30 I'm still holding something I can write against covered.