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

To: Vol who wrote (243)	5/21/1999 12:37:00 AM
From: Greg Higgins	Read Replies (1) \| Respond to of 355

Vol writes: would you mind giving some examples so we can follow your strategy Sure. Feb 3, with the underlying XXX about 60 I buy the Jan 01 35 Strike and sell the Feb (99) 60 strike net debit 27 or so. Feb expiration, I buy the Feb 60 and sell the Mar 60 net credit 1 5/8. Mar expiration I buy the Mar 60 and sell the Apr 60 net credit 1 5/8. Apr expiration - the april calls expire. I place an order to sell May 60 at 2 1/8. It gets filled. May expiration - I buy the May 60 and sell the Jun 60 net credit 1 5/8. I put the order in Monday to make the trade, but I never quite get my price until thursday morning. I also bought more Jan 01 35 and sold the July 60 net debit 24 3/8. I'm definitely not using a high flier, but I'm not using stodgy stocks either. When the time comes, and it might be soon, I'll move from the 60 strike to the 65 strike. When that happens, I expect I'll do several things to lessen the burden of buying back the pricey short position: 1) I'll move two months out instead of 1 to give my self more premium 2) I'll sell a small number of naked calls at the higher strike which I'll expect will eventually expire. The naked calls will likely be less than 1/3 of the position. If I'm lucky, I'll get time to spot the rise before it happens and I'll move up by moving out and end up picking up the whole strike differential. I was planning to move up this month, but the market traded down and I didn't have too. Now I'm hoping to stay with 60s through July and probably August. My goal for this particular stock is $5 every 6 months between Feb 99 and Jan 01. This would put the stock around 80 at expiration. Since I own the 35s, I'll exercise at that time and own the stock on margin. I'll continue writing and rolling calls.