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Yes but not 100% guaranteed. Here's why. If the takeover is for CASH, then the value of the underlying stock is <i>never</i> going to be more than $11. But, if a higher bidder comes along before the deal closes, then the stock can move higher. To allow for that possibility the calls may...

DITTO MTE's advice. Do not pay for recommendations. Instead, try to learn how options work. Understand options strategies. Learn how to manage risk. You can do all this is a free, paper trading account. Or use real money and trade small. Even if you lose some money, it's far better...

There are no potential losses to the upside. Losses to the downside were reduced when the calls were sold. I believe this is just Scottrade being ignorant. They are a horrible broker for option traders. Mark

To improve the break-even range, choose strikes that are further OTM. Your max gain will be reduced and your max loss will be increased. More risk = more reward potential. That's investing. Mark

1) You buy 200 shares by automatic exercise. 2) You get a margin call 3) You sell the GOOG shares. Revenue for the broker. Mark

Buying wings converts the naked strangle into an iron condor. And that's a much safer (and more intelligent) method of selling premium. Mark

I've been complaining about this issue for awhile now, but no one cares. Here's ax example from my blog: http://blog.mdwoptions.com/options_for_rookies/2008/06/warning-about-t.html The RIGHT to decide disappears at expiration, and any option that finishes ITM is automatically exercised...

Thanks for providing the link. Mark

The truth is I got careless. I did not recognize the difference between events are are independent (flipping a coin repeatedly) and events that are mutually exclusive (coin landing on heads and tails at the same time). I calculated the probability of a 30 delta option finishing out of the...

After touching one strike, it takes an extra large move to reverse and touch the other. But, it's a real risk. Here's advice I follow when trading iron condors: If I decide to adjust one side of an iron condor to reduce risk, I almost always buy back the winning side because the price is...

True. Risk management is your key to success. A 30% probability of FINISHING ITM does NOT mean a 60% of moving ITM at some point. Others can provide a way to calculate the probability of 'touching' the strike. I believe TOS offers that calculation to its clients. Mark

This is the classic bull market strategy that kills. It will not work over the long-term. 1) Sometimes markets gap lower and, as already mentioned, it's not always possible to buy back the options for any price near the price at which you sold it. 2) Rolling to the next month does not...

cb, I decided it's time to learn a bit about probability theory and to my embarrassment, you are correct. Sync, I apologize for the incorrect reply (twice). I did not grasp the important difference when events are mutually exclusive. 30 + 30 is indeed 60!! Mark

30 % of the time the put is going to finish ITM. No disagreement on that point. The calls are always OTM when that 30 % occurs. Of the other 70%, part of the time the calls will finish OTM and part of the time, the calls finish ITM. The question is how often the calls finish ITM. The...

You want to get the 'per-ticket' charge reduced to something near zero. There is nothing wrong with $1 per contract, but adding $7 or $8 to cost of trading is not justified - unless you just love the broker and are willing to pay up to use that broker. Also exercise/assignment fees cannot be...

Those commissions are unreasonable. Unless you are a very inefficient trader, the broker is taking too much and you are keeping to little. Speak with your broker and request a substantial cut in exercise/assignment fees. Tell them that Interactive Brokers charges ZERO. You may also be...

1) If the underlying is near the strike price, you will NOT be assigned early. 2) What are you trading? If it's a stock, being assigned early is never a problem. You have a position that is never worse than you had before being assigned. 3) If trading OEX - that's a BIG problem. 4) If...

I was interviewed by Chuck Jaffe of marketwatch.com on the radio yesterday. If interested, it can be heard through next Wednesday, Mar 5 at: http://www.yourmoneyradio.net/thursday.h... The interview begins at the 22 minute mark and lasts for 17+ minutes. Mark