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If the UL stays around the same price post ex-div, it means that the UL rose by the amount of the dividend. Have you considered that IV fluctuates day to day? It could rise, drop or stay the same after ex-div. That's due to market forces, not the dividend. Dividends are priced into both...

I'll do that when I become OC-Ded :)

There's that plus covered call writers collect FREE money. If you sell the naked put, you might have to buy the stock and that costs money!!! :D

Do the put: 1) Commissions and slippage 2) Ease of executing 1 position instead of two (fast market)

How come the thumb didn't reverse direction and turn red?

How much call premium will fall on the ex-date depends on the amount the stock price drops and where the call's strike price is in relation to the stock price; that is, whether the strike is ITM, ATM or OTM. The ITM call premium can be expected to drop dollar-for-dollar with the stock. In...

Why would ITM call owners tend to close prior to the ex-date if "on the ex-date the call price will rise and the put price will drop"? If it was the case that call values would rise, everyone would be buying calls in order to make an easy buck. As for why do I think the call will drop and...

Rut roh, RHT under $43 AH. Should we hope that the Euro strengthens?

atticus, do you have any links for dispersion related info that doesn't require a PHD to comprehend? Something a meat and poatoes trader could comprehend? :) Thx

Dividends are priced into the options. With ATM options, it's spread evenly across both puts and calls. The more and option is ITM, the greater the ex-div effect on that option. IOW, if looking at a strike 5 pts higher than the UL, that call will drop more than the same strike put will rise...

FWIW, SPY is American not European exercise. IV can increase dramatically thereby causing margin requirement to increase (not a problem for you since you're escrowing 50% cash). Your risk is that once you buy the SPY shares, all it has to do is be $1.90 at exp. and you're a loser. And...

Equivalent means having similar or identical effects. Being equal. That applies to certain option strategies. In this topic, buying stock and simultaneously hedging with a long put gives you the same risk graph buying the same strike/month call. Another popular misconception is that...

When you play with multi-legged positions and subsequent adjustments, the UL has to cooperate and you have to be clever (lucky?) enough to adjust somewhere in the vicinity of the right time to adjust. You can't just mechanically put them on and expect them to work.

That's a bit much to ask, methinks. But as an example, I bot a stock at 96 in Oct and it moved against me. I probably should have cut my small losses and run but I got stubborn and married it. Over 2 weeks, I utilized 8 different options (some bot/sold more than once) and unloaded it at 83...

That's the point. Buying deep ITM puts to protect long stock is the equivalent of buying a long call. And then selling a shorter term call against that position after the UL runs up is no more than legging into a diagonal spread. You don't have to be a rocket scientist to make money with...

I received the following via E-mail tonight. I can't believe the (disguised) crap that people try to sell: http://www.radioactivetrading.com/the_sketch.pdf

Thx for the link. Wish there was more meat in it to chew on :)

Gold and oil stocks tend to have good volatility. Teach him how to trade :)

1) Typo? Did you mean $13.30 ? 2) While less likely, apart from MM possibilities, the buyer of your call could have been closing an open position.

For example, stock is 52 and 50 put costs $2. Stock drops to $45 and 50p is now $5. Net loss of $4 at expiration. Now you buy a 45p for $2.50 and short term, the stock must rise about $5 to break even (recovering the $4 plus offsetting about $1 of 45p premium loss from the rise). If at...