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Strategies & Market Trends : A Study of Covered Strangle in a Rather Neutral Market
QCOM 168.52-1.0%9:30 AM EDT
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To: PAL who wrote (13)8/20/2001 3:14:58 AM
From: PAL  Read Replies (2) of 23
 
Under buy/write the maxim return will be achieved when the stock closed at 65 or higher. The holding will then be all cash:

1,800 times 65 = $ 117,000
cash = $ 5,510
_________

Total $ 122,510 or a gain of $12,510 on the original $ 110,000 which translates to 11.37%.

________________________________________________________

Summary

100% cash/short put:

Maximum return: stock at least 60, profit of 10.36% versus risk when stock closed at 54.30.

Buy/write:

Maximum return: stock at least 65, profit of 11.37% versus risk when stock closed at 58.05

Covered strangle:

Maximum return: stock at least 65, profit of 20.31% versus risk when stock closed at 56.175

(see posts # 10 and # 12)
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