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American Capital Agency Corp. Message Board

  • yourbestfriendintheworld yourbestfriendintheworld Nov 19, 2012 2:47 PM Flag

    Already Put My Xmas Dollarmite Up


    Another ratioed synthetic long, because why not make the market pay for itself?

    Per unit: short 1 Dec 31 Put at 1.44, buy 1.4 Dec 31 Calls at 1.02. Net credit 1.2 cents per unit.

    The call delta is .5343 and the put delta is -.4556 and the underlying was 31.10 at entry, so the initial crappa* works out to 1629% on the call and 984% on the put.

    * - % change in option premium per % change in stock price.

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    • YBF,

      This looks like Déjà Vu all over again. You just told us about bailing for a loss on a similar position upon the slide last week. Why not consider wrapping this Christmas Dollarmite in Pampers so if you S$$T again, upon another #$%$ crash, you won't make a mess....sorry.

      Here is how. Just add a long leg buffer. You can still get the Dec 31/30 Spread for .50 credit. So multiply your present Short position by 3, and you retain your 1.50 credit, and secure your position down to 30.50(BE), and have a maximum .50/spread loss, @ 30.00 or lower.

      Granted your BE with your current position( on the Puts) is 31.00 - 1.44 or 29.56, but you covered last time at about the same PPS, right? This position, I am describing, saves you being in that uncertain position, wondering if we'll go to 15 and stay there.

      So just grab as many Long legs(30's) as you have Short Puts, and then grab additional spreads until you have the same credit, as you now have. For best results you need to hold the spread to either EX or OPEX.

      Just an idea.....


    • I like your trade, buddy : )

      Sentiment: Strong Buy

17.79-0.06(-0.34%)Feb 5 4:00 PMEST