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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 (7)8/19/2001 1:13:10 PM
From: PAL  Read Replies (2) | Respond to of 23
 
What if the stock closed below 60?
We will get assignment on Monday at a price of 60.

Covered strangle: we have $ 57,650 cash and already own 1,000 shr of qcom.
Net result:
own 2,000 qcom MINUS $ 2,350

100% cash/short put: we have $ 121,400 cash.
Net result:
own 2,000 qcom PLUS $ 1,400

The latter is better.

Conclusion:

If qcom had closed below 63 3/4 last Friday 100% cash/short put is better, but if it closed above 63 3/4, then covered strangle is better.
own