tjlocke99

Does anyone know what happened to SFO magazine? Did they close up shop? I was trying to read some of Augen's old articles on SFOMag, but I can't find any reference to the magazine anymore and the site doesn't exist. Thanks!

One more question. For those of us who can't manage our positions during the day, is anyone setting limit prices on each of the short positions? How would you do this? Would it be a stop loss order on an option? Any idea on how to determine what price you set the stop loss at because our rules are based on the underlying price, not the option price. I am thinking of setting this stop loss on each short 1% higher than the total credit I received. This would keep my losses around 1-2%. Also I am not sure if this would work well given the bid/ask spread. I re-read the original post on this. I didn't see any comment on this. Thanks!

Thank you Tyler. If SNDK rallied hard over those 2 weeks you would also invariably lose money or break even on your weekly short strangles. Therefore you would lose. To illustrate my point again I will leverage your example: 1. SNDK is trading at $39.50 on a Monday (which is the long call we are holding). At that point in time, the 39 C is worth 2.50 and the 49 Put is worth 10.35 making the long 12.25, or a profit of .10 for not much gain 2. we are forced to exit our short call on this same Monday. Therefore we own ONLY the long strangle until the upcoming Thurs. 3. between Mon and Thurs SNDK rallies to 44. We have no lost probably around 5-7% on the long at this point. I do like what you said though. Maybe I'd roll the long strangle when it gets within 2% of the strike. You roll the entire long strangle right? Not just the side where the underlying price is getting close to the strike? Thanks for bearing with me! Also, sorry for my poor postings last week. I was very pressed for time, and I was not very clear in my writing.

Chris and friends, I was looking at some information from this past week on this trade. Wouldn't this trade have BLOWN up pretty bad this past week of 5-9 Nov? If in Mid-Oct (10/18) you had entered the Dec 161 call and 178 put for around $19.60 (that is .05 over the mid), the first 2 weeks you'd have a profit of around $20 BEFORE commissions - that is probably break even after commissions and that assumes you are selling the strangles AT the midpoint. Then last week this trade would have blown up pretty bad. 11/1 You short the 168 call and 164 put. 11/2 GLD is down to 162.60 so you close your put at an around $130 loss. It gets worse. You have kept that 168 call. 11/8 GLD is up again close to 167.98! You pay around .63 to close your short call (you were sweating the days earlier because GLD had been rising anyway). so you barely breakeven there WITHOUT commissions. 11/8 at this point your long straddle is also down around $33! So in 3 weeks you have lost around $143 WITHOUT including commissions and WITH expecting pretty good fills. That means you are probably really down closer to $180 or close to 1.7% of your original investment. I am estimating the #s without a spreadsheet or calculator now. Am I missing something? Thanks!

MSFT has an ex-dividend coming up next week. I think its Nov 12th. Doesn't this affect your strategy as you could get exercised on your short call?

I am really sorry. My day job makes it almost impossible for me to keep up with this anymore I think my point is still valid though in that the long call or put could end up being very directional correct? Isn't that an issue since that long position had covered the losses on the short position?

Thank you for answering. I apologize, but do not believe I stated my question clearly. I mean the LONG XOM Put position has now gained enough value to offset most of the other losses (at least as of 11/8). If you close out a XOM position before the next set of weeklies our out you are left only with the long put and long call. With the long put worth more than the long call has lost and with it having a higher delta you are directional for the days you are not holding a short position. Additionally your long positions remain "directional" if the underlying prices hovers anywhere near one of the strikes?

Could someone comment on this. The original long call at 40 is now barely ITM. The 49 Put is DEEP in the money. Does this affect the strategy at all? I mean if you sell a 40 16 Nov call against a 40 Dec call than that is part of a risky calendar play. What happens if SNDK goes below the long call by going below 40?

Chris, If we closed our XOM shorts today because the price went below the short put at 87.5, then it seems our long positions are "directional". Thus if XOM reverses and goes up then our losses compound. Wouldn't it just be better to close the whole trade? For example the whole 4 legs could have been closed today at a very small profit? Thanks!

Chris, Thanks. When you say "just close that side out", you mean the both the short put and the short call correct, leaving you with just the Guts strangle? Any reason you don't just close the whole trade including the Guts strangle piece and re-open the whole 4 contracts on Thurs again (other than the transaction cost of the trade)? Thanks!

Chris, You know after this hurricane experience, holding a few short AAPL weekly calls going into a Friday scares me. Forget losing an Internet connection, if they close the markets again on a Friday for whatever reason (natural disasters, man made disaster, etc.) but allow exercising then the short holder could get crushed!

Chris, I think the advantage of the collar is that deep OTM options supposedly have less decay as a % of the option price in the last 30 days then nearer ATM options. So you could hold an OTM put with less decay and get the protection if there is a catastrophic drop. Anyway, another option on this trade is to look at a weekly short strike $5-10 OTM instead of around $10-15. All this being said, what about your long ITM longer dated Guts strangle and selling the shorter dated strangle like you have mentioned on MSFT, GS and SNDK?

You have to protect those few remaining very well paid specialist jobs! I highly doubt a machine algorithm could not replace them or as you point out the jobs could be geographically dispersed. This stuff also still smells of providing some insider advantage, just like the fact institutions can trade options past 4 PM - doesn't that let them take advantage of the early after market activity?

GREAT response Marco! This makes me wonder though. I wonder if this can be a way to get a call option on at a discounted price if you buy the call the day before the ex-dividend date, you may be able to get it with almost no time premium. Of course it is likely this is already priced in. Thanks again Marco!

I think most of the answer to post #2 was actually captured in my original question in this area: http://steadyoptions.com/forum/topic/624-covered-calls-and-synthetic-covered-calls/page__hl__synthetic#entry11374

Interesting point Scott. So in this case maybe you'd buy the $640 weekly put for $2.50?

Sorry, after looking at this I see its still early in the trade. Chris, How did this trade work out for you? Also wasn't the net debit $4.63 not $2.63?

Great answer Marco, thank you. One thing I don't get is why someone would exercise their ITM option the night before the ex-dividend date? If they received $2.00 for the ITM call, then they exercise there call and they buy the stock for $63 and lose the $2.00 premium they received. HOWEVER in my example the next morning they have lost around $.50 in the value of the underlying stock. So they gain the $.51 dividend and lose almost the exact amount on the value of the stock?

Chris, why is this true, "If we went through an extended period (3-4 weeks) of the VXX spiking up (which could EASILY happen), this could result in 25-40% losses."? Won't your short put cover most of this loss and the gains in your long call over your long put make up for most of this as well? Also, regarding your rule about the underlying hitting one of the short strikes before Friday, do you close the whole trade including your long ITM strangle? Thanks!

Chris, Sorry for the 2nd response on this post, but what criteria attracted you to SNDK? Thanks!

Chris, In reading some books on Iron Condors I see that deep OTM options decay the greatest % amount 90 to 30 days from expiration and that ATM options decay the most in the last 30 days. Therefore do you think it may be better to go long the January or even Feb expiry and short the Dec OTM expiry and close the shorts in Nov? Thanks!

Hello. Recently I was researching what happens if I hold a covered call through earnings. I came across this article on theoptionsguide.com http://www.theoption...ered-calls.aspx It discusses writing a covered call but shorting a DITM call to try to scalp the dividend. It seems the reasons this strategy will not work is because it is likely you will be assigned on that DITM call. However could someone explain to me how that would work? Let's take a hypothetical example: GD ex-dividend date 10/3 for $.51 a share Let's say GD is trading at $65.00 On 10/2 during the day you go long 100 shares and sell a $63 Oct call for $2.00 even. On 10/3 the stock drops and closes at $64.50 What would happen regarding you being assigned? Also do you need to be long the shares on 10/2 or is getting long the shares on 10/3 sufficient to receive the dividend when it is payed? Thank you!

Marco your analysis makes sense. I will backtest in TOS on what happens when holding through earnings. My only problem with testing like this that its based on the daily closing price and the day after earnings can have big swings.

Hello. Has anyone ever tried purchasing straddles or strangles with expirations out 2 months or more (even out to near LEAPS time frame) and doing this around earnings time for very small gains with very limited theta decay. Alternatively holding these longer dated options through the earnings announcements? Thanks.

Scott, What is the strategy you describe called? Is the Butterfly a Long or Short butterfly (long meaning there is a short ATM straddle covered with long positions in the wings). http://www.theoptionsguide.com/butterfly-spread.aspx Thanks!