Rock99wu, Thanks for your understanding and help. I didn't understand what you said, quoted below. i dont own any puts. i'll quote what i have again:
" 200 Feb05 240 Calls @ 1.71 = $34,200 200 Feb05 230 Calls @ 1.85 = $37,000 040 Feb05 220 Calls @ 3.91 = $15,640 031 Feb05 210 Calls @ 7.01 = $21,731 -------- Total Spent $108,571 Right now, I have an unrealized Loss of $61,000. I have $46,000 worth of skin in the game to further lose."
Now you said:
"sell Feb 200 put and call and use that money to cover some of your lost and buy out of money Feb 190 or 180 put. I will sell the Feb 230, 240 call that you already have when there is a gap up. "
Are you saying basically don't do any puts at all? Just sell all 4 calls when/if there is a gap up?
If you do a google search, ironicly, for "long butterfly" and you will find your answer. It is hard to predict GOOG price at option expiring date. Since this stock fluctuate so much during the day, you can try to sell calls and buy Feb 190 put when the price go up. Then sell Feb 200 put when price goes down, for example.
You spend too much on one stock. should consider sell 80% when there is a bounce and take some lost. Wait till next quater report and buy some out of the money put. Someday, GOOG will tank. Just my own opinion.
Holding 200 Feb05 230 calls and 200 Feb05 240 calls will be expensive as expiration approaches. I'd gradually, especially on up moves, sell the 240 and then the 230 calls. I have short 230/240 calls and I plan to let them expire worthless.
My inclination would be to get out of your position altogether... but do it gradually. It would be wise to hedge your long calls with short Feb05 calls at different strikes... this will hedge down moves in GOOG and reduce your carrying costs of holding long calls. I'll look at some alternate option risk profiles tonight/tomorrow am. I wouldn't increase your exposure in GOOG with puts... that will just guarantee a TOTAL loss on either the calls or the puts.
when you say *gradually* sell the 230 and 240 calls, i take that to mean, don't jump and sell them all tommorow, rather, over the course of the next week barring any major jumps up?
a disclaimer: i have *never* shorted an equity, nor an option. i want to learn how to but at this point don't how. i am very afraid i don't have the knowledge to execute a short sell. i dont know if my margin is an issue. Here arethe numbers listed below in my account status below.
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
My take away from what you said is only to sell tommorow on big pops up, say 5 point up gains?
I look forward to your research on what call strikes to short. Thanks again.