A Study of Covered Strangle in a Rather Neutral Market Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : A Study of Covered Strangle in a Rather Neutral Market

QCOM 168.52

-1.0%

9:30 AM EDT

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: PAL who wrote (9)	8/20/2001 1:44:05 AM
From: PAL	Read Replies (1) of 23

What the the maximum return for Covered Strangle and 100% cash/short puts? a. 100% cash/short put: the maximum return is to keep the premium, i.e. 20 times $ 5.70 times 100 = $ 11,400 or = 10.36%. this happens when the stock closes above 60. b. the maximum return for covered strangle is when the stock is above 65: - 1,000 shares of qcom is called at 65 = $ 65,000 - cash = $ 57,650 - premium kept = $ 9,700 _________ Total $ 132,350 or appreciation of 20.31% __________________________________________________________ Summary: Covered strangle: Maximum return: stock at least 65, profit of 20.31% versus risk when stock is at 56.175 100% cash/short put: Maximum return: stock at least 60, profit of 10.36% versus risk when stock is at 54.30.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next