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Strategies & Market Trends : A Study of Covered Strangle in a Rather Neutral Market -- Ignore unavailable to you. Want to Upgrade?


To: PAL who wrote (22)8/30/2001 1:51:41 PM
From: PAL  Respond to of 23
 
This is a risky move. First we do not know where the market is heading, and second we are selling put before selling the call, which means that the downside protection is less (compare that if we have sold the call first). Nevertheless, I am in the camp where I think the market is moving sideways plus minus 8% of nasdaq 2000, and now we are at the lower range of nasdaq.

Later I will outline the risk level with yesterday's move. Nasdaq is now 10% below 2,000 which is outside the range of 7 to 8 % I am comfortable with. The market looks like moving lower from the range bound neutral environment. Be prepared to take some losses to avoid large ones.

If the market does not find a support right here, then abandon the strategy for rather neutral market. But don't just jump in immediately into another strategy. Don't need to be in the market all the time.

aaomm is at $11.30, thus I am $1.10 under water.