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re: BOIL has become predictable
Posted on 7/30/14 at 5:39 pm to Iowa Golfer
Posted on 7/30/14 at 5:39 pm to Iowa Golfer
If the delta is .75 or higher it is DIM (deep in the money). This is what I think you're trying to accomplish, an stock replacement strategy.
I don't explain things well. Let me say this, if you want to go long UNG for Jan, so long as you understand UNG will already be in February future's contracts, a deep in the money contract isn't a bad way to do it.
If you want to price the option go to the CBOE's option's tool found here:
LINK
Play around with this.
I don't explain things well. Let me say this, if you want to go long UNG for Jan, so long as you understand UNG will already be in February future's contracts, a deep in the money contract isn't a bad way to do it.
If you want to price the option go to the CBOE's option's tool found here:
LINK
Play around with this.
1
Posted on 7/30/14 at 5:50 pm to Iowa Golfer
Want to take some risk? UNG is liquid. Their naked options requirements are only 20%.
Why wouldn't a guy buy a Jan 2015 $20 call and sell a Jan 2015 $20 put? Immediately place a contingent buy to close if UNG hits $19.
It's not that scary, or not as scary as some on here make it out to be. You'll need to watch and risk manage the trade. But really you're out buying 100 shares at $20 if the bottom drops out. So in a worst case scenario you lost the premium on the call, and had 100 shares put to you at $20 less the premium you collected for selling the put. You do get something of value in the end in a worst case scenario.
Why wouldn't a guy buy a Jan 2015 $20 call and sell a Jan 2015 $20 put? Immediately place a contingent buy to close if UNG hits $19.
It's not that scary, or not as scary as some on here make it out to be. You'll need to watch and risk manage the trade. But really you're out buying 100 shares at $20 if the bottom drops out. So in a worst case scenario you lost the premium on the call, and had 100 shares put to you at $20 less the premium you collected for selling the put. You do get something of value in the end in a worst case scenario.
This post was edited on 7/30/14 at 5:53 pm
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