Buy insurence for my leaps positions

[seotrader]

Hello,

I want to buy deep in the money GOOG 410 JAN11 call at around 20,000$
I want to sell covered calls every month against it ( for the next month)

I also want to protect my invested capital in a not very expensive way

For example the JAN11 580 put cost 6810$ and the MAR10 580 put cost 3150$

I just wonder if someone has a strategy to protect your leaps position using puts but in a cheaper way, because for example if i'll buy the MAR10 , its 15% of the invested capital just for 4 month protection

Hope someone can help me.

Thanks

 

[option911]

Hello,

I want to buy deep in the money GOOG 410 JAN11 call at around 20,000$
I want to sell covered calls every month against it ( for the next month)

I also want to protect my invested capital in a not very expensive way

For example the JAN11 580 put cost 6810$ and the MAR10 580 put cost 3150$

I just wonder if someone has a strategy to protect your leaps position using puts but in a cheaper way, because for example if i'll buy the MAR10 , its 15% of the invested capital just for 4 month protection

Hope someone can help me.

Thanks

I would try setting up a synthetic risk reversal. You could sell calls that are closer to ATM, and buy puts that are much further out of the money. This would allow you to produce a positive cash flow and also be somewhat protected against a major down move.

Mark

http://www.option911.com

 

[seotrader]

Hi Mark,

Sorry but I didn't get you

Do you mean doing it in addition to the ITM leaps I have which I sell monthly covered calls against it.

In case yes then the ATM calls will be naked which is very dangerous

And the OTM puts will not give enough protection and still kind of expensive

for example the 510 MAR put cost now 980$ ( 1 contract ) which is 5% of the capital for 4 month protection.

In case we will have a goog drops from 580 to 510 I guess the leap will lose around 6000$
before even the protection started.

I hope you understand my problem and have a better solution for me.

Thanks