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  • ktstocks ktstocks Feb 2, 2005 7:15 PM Flag

    Sell my Feb calls? life savings. HELP!

    That is the kind of help that he needs to here. I don't kow what he has in the account for margine to cover teh spreads, therefor I don't how much of those spreads he will be able to do.

    Assumong that your break even point is accurate, and I don't doubt ti he can come out of this ok as long as he plans exit points if it turns against him.

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    • hi ktstocks

      My Brokerage Acct Current Status:
      Maintenance Margin: $37867
      Available funds $160
      Leverage 0.82
      SMA $19058
      Stock value $18969
      Options Value $46315
      Net Liquidation $84000
      Unrealized P/L ($60700)
      Equity With Loan (EWL) $37986
      - I have unlimited trades left right now, however if I go below $25K Equity with Loan, they limit the # of trades.
      - $45K in another account totally

      does this tell you anything?

      shortgamma, whom you've indicated as knowledgable, thinks i should not do any PUTS, only short sell some calls.

      perhaps you could you explain to me shorting calls? i know its probably stocks 101, but i never did any shorting.

      don't i need to have equity in my account to cover the short in case the stock rises?

      does that somehow come out of the 4 call positions i already own as collatoral?

      thank so much

      • 2 Replies to sjs1234321
      • First off, I have successfully played many of GOOG's 15-20 point swings in the past few months. I personally think GOOG is set for THE decline when the final lockup shares are released.
        You need salvage what money you have and make it back if possible so listen carefully as I am sincerely trying to help you. We've all been there.

        Sell the 220s, 230s, and 240s tomorrow to raise cash. Don't worry about the loss as you must have cash for the future 20-40 point move that is to come in the next couple weeks.
        End result is you want to be in neutral-bearish position with both calls and puts for whatever movement will happen.

        The first moves.....up to the lockup date (volatile), and then after the lockup date (down)

        So position yourself accordingly tomorrow.
        You have three distinct possibilities.

        1] GOOG continues to go down. [If you keep hoping and do nothing, you lose it all] Not Recommended
        2] GOOG stays the same [Your call premiums decay and you lose another 50% of your current balance] [Not Recommended]
        3] GOOG moves up higher [You luck out and break even] [Wishing doesn't help you tomorrow, Only action will, Time Decay is upon us with 12 more trading days]
        [Not Recommended]

        Though many would be rooting for #3, I highly doubt that as GOOG has fallen heavily and you must protect yourself from the worse.
        Since you have asked sincerely from the board. Here is my answer:

        I recommend swallowing the bullet and taking the losses on the 220s, 230s, and 240s for their time premium left today. They will further decay very fast as they are OTM.

        I am using the bid prices from close.
        240 200 Sell @ .35 = $7000
        230 200 Sell @ .80 = $16000
        220 40 Sell @ 2.00 = $8000

        210 31 Hold for now as these will be the first to increase if GOOG bounces

        You'll have roughly $30k to play with. Consider yourself lucky that you only need to triple from here to make your money back. That in itself is hard but more possible than making 10 times after losing 90% just to get back to breakeven. Do not hope. Always be IN the trade. Always remember what the odds as they are constantly being stacked against you every day by the market makers.

        Ok so you have $30,000. Brace for the downtrend. DO NOT just buy puts as I have a feeling the MMs will hold this to crush time premium going into the lockup. They will swing it hard and currently, that movement could be down to the $190s before they move it back up, trap even more option speculators....of course!

      • He is saying the same thing that I said to you, sell the calls. I did a long explanation in one of previous posts to you describing this. I explained how margin works etc.

        You need to learn how to sell options. Think of it this way. If you own the 210 call option that is going to expire in february only three things can happen.

        The stock can go up which will increase the price of the option. But, it has to go up to 210 plus the $7.01 that you paid for the option, that means it has to hit 217.01 to break even.

        The price stays the same as it is now, 204 and change. The options than expires worthless.

        The stock goes down, again the option expires worthless.

        Now do you want to own the 210 option or be the house and sell it? Become the house and then you get to keep the premium. Everyday you win on time decay.

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