EMC Title:
Opening Date 29/12/2006 ($ 13.29)
Call
B1 B1 13 Apr07 Apr07 13 Put
Max Risk: $ 145.00
Rational Input
A friend of mine who ProfitSource (a tool for the analysis technique based on wave theory elliot), said that EMC would go under $ 13 by the end of March.
Ok, but since the VI is low, I buy a straddle
exit strategy:
Wait until late March, however, then go close to not lose too much time value.
If I make a profit before I try to consolidate, reducing the risk.
I do not have long to wait.
On January 10, in fact the title arrives at 14:36, and my 13th call I am going to straddle the profit.
What to do? Profitsource trust in, and decided to terminate the call and remain with the put, the more so at this point is a free-trade risk.
summary: Put a
13 Min $ 35 profit
Current Profit: $ 55
On March 7, I get a better idea: since I put expires in April, I can do about it? The answer
'.. YES.
EMC and 'to 13.05, sell a put option on March 13, and transform it into a calendar ATM, free trade.
The March 16 put option expires ITM in March of 0.01 cents (12.99)!
and are exercised ...
Not bad I took all the credit of the put option sold and I still put in April. If on Monday following a disaster were to happen (gap) would be protected.
But it is not. On Monday I can sell the underlying at 13.07 and close the position PUT.
Total profit of the trade: $ 90 in less than 3 months
