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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 (6)8/19/2001 12:38:16 PM
From: PAL  Read Replies (1) | Respond to of 23
 
What if QCOM did not close at 61.56 on 8/17/01?

Covered Strangle : owns 1000 sh of qcom and cash $ 57,650
100%/short puts : cash $ 121,400

The breakeven is ($ 121,400 - $ 57,650)/1000 shares = 63 3/4.

Therefore, if QCOM closed higher than 63 3/4 Covered strangle is better.

If QCOM closed between 60 and 63 3/4 , then 100% cash/short put is better.

The next question is, what if QCOM closed below 60 and you get a call on Monday that you have been assigned?