Grind it baby...........Capital Allocation

[ducati998]

After reviewing the initial selection of option contracts I have come to the conclusion that my initial selections are quite seriously flawed from the point of view of the strategy.

Therefore, it is my intention to amend all the initial selections I shall however leave the original selections in place as a comparison.

The alterations will be in the following manner.
All the expiry dates will remain unchanged
The initial options purchased will be in the money contracts

This will allow capitalization of profits within the underlying stock price viz. an increase of intrinsic value of the option

The mistake in the initial selection was that time value and volatility are too subjective for a quantitative operation.

cheers d998

 

[frugi]

Just for fun then ...

2 x DIA Sep 2005 106.00 puts @$1.70 each = $342
1 x DIA Dec 2005 104.00 put @ 2.25 = $226
1 x DIA Mar 2006 90.00 put @0.80 = $81
1 x DIA Sep 2005 107.00 call @1.35 = $136

Multiplier x100. Total cost $785. Entry 20/7/05.

Sold 1 x DIA Sep 2005 106.00 put @$2.10 = $209 ... $38 profit or 22%

A somewhat cowardly exit for scant reward, but time is running a little short.

 

[frugi]

Uh, okay I should have waited a day...

Sold 1 x DIA Sep 2005 106.0 put @$2.70 = $269 .... +$98 or 57%

2 x DIA Sep 2005 106.00 puts @$1.70 each = $342 SOLD proceeds $478

Still open -

1 x DIA Dec 2005 104.00 put @ 2.25 = $226
1 x DIA Mar 2006 90.00 put @0.80 = $81
1 x DIA Sep 2005 107.00 call @1.35 = $136

Multiplier x100. Total cost $785. Entry 20/7/05.

Essentially I've now paid for the call which will probably expire worthless. The profit, if any, will be in the Dec put.

 

[frugi]

...Thanks, but not so fast Joules. This tedious range is taking its toll.

The call expired worthless for -$136 so I'm now even on the sold positions.

Still open -

1 x DIA Dec 2005 104.00 put @ 2.25 = $226
1 x DIA Mar 2006 90.00 put @0.80 = $81

Multiplier x100. Total cost $307. Entry 20/7/05.