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The best choice is often to accept the loss and move on. In lieu of that: A naked put = a covered call (NP = CC) By adding a short straddle, you're converting your long stock into a CC and adding more of the same in the form of the NP. It's just dollar cost averaging down. If...

What makes you think that if you got it wrong the first time that you're going to get it right the second time? The whole idea with hedging is to adjust the position to benefit from the unknown change of direction.

While paper trading isn't exactly the same as real time, it's certainly the best way to get trading experience. I real time day traded (equities not futures) for smal gains for a number of years before I had a break out year. Keep at it on paper until you get comfortable with the process and...

Yep, you proved that beyond the shadow of a doubt with your cherry picked hindsight curvefitting. LOL. Given that you picked the period of 5/01/09 and 6/11/09 to demonstrate your point, try using a $ neutral position as suggested in your first post in this chain instead of a face saving 2:1...

Yep, you got it. It's not flatlining with yourt hindsight curve fitting.

[If you're going to gamble foolishly with cheap OTM near term expiring options, at least do it wisely :) You'll know in 3 weeks what the best plan of action is/was. As for today, it depends on how much of a day at the track you think this is. Prudent man takes his new found money and...

What you're doing is no more than curve fitting. You could have just as easily done a 1.5 to 1 ratio or no ratio at all and you would have made even more money. Picking 2:1 out of thin air is just that. If you took your 5/01/09 quotes and did an equal dollar ratio, what would you be ahead...

As an aside, there was an article recently in one of the option magazines that cited Robert Shiller's book (whoever he is). It suggested that brokers and financial advisers act in accordance with conventional wisdom rather than think out of the box and use their own judgement. As a result...

Well, that dogmatic poster on page two coerced me into believing that it's better to close :) I think it's a simple process for you. If you're comfortable with the risk and if you can find something better then you close the 5 ct option and go elsewhere. If you can't find something better...

I'd go with a guess of delta neutra for hedging that riskl. It's nowhere near risk free but their advantages are light years ahead of ours. I'd bet that they're close to transacting before you/I even kow it's time to transact. Perhaps Mark or other real former_mmakers will enlighten us :)

1) LOL. You must have me confused with someone else. I haven't mentioned catastrophic failure. What I stated is that I believe that the risk/reward of a naked 5 cent option is lousy. If you believe otherwise, so be it and we agree to disagree. 2) Do you really believe that what you and I...

Well, here's my last comment. Cover for a nickel and wait 3 weeks until the next sweet spot arrives. Or not.

One size does not fit all. Hedging is not for everyone and you have found the size that fits you. It's not right. It's not wrong. It's just your comfort zone. So, dya have any 5 ct puts I can buy?? :)

Well there's your answer. We're full of dogma; tho possibly we're veterans, we're not doing what you're doing; we have different risk profiles; and you know what your potential losses are. Rhetorical question: So why did ask for our opinions?

I don't need to make up my mind. I've told you what I think of 5 cent positions. As for what you perceive as arguments: 1) It's not a margin issue since you indiicated that you have more margin available than you need. I take your word for that. 2) It's a risk consideration, albeit an...

LOL. It's only an argument if you make it so. Is there some magical day in the month, perhaps the Monday after expiration where only on that day you can find positions worth taking for the next month? Is there any possibility that you could cover this position for a nickel and find an...

Having margin available has nothing to do with locking in gains and taking risk off the table (which as you noted is APWR spiking up and going into play). IMHO, any way you cut it, trying to collect a nickel in 3 weeks is a bad position.

Which company is perceived to be the premier company is irrelevant in pairs trading. The spread is the important factor and which side you're on depends on which leg has been the outperformer. At an appropriate point, it could be long PCU and short FCX. Raw materials having larger movements...

Your calls have an asked price of 10 cts. Is there any possibility that you could find another trade that could make more than 10 cts in the next 3 weeks? Don't monkey around buying long ATM premium. Put in an offer to buy to close at 5 cts.

Lower premium for call spreads would be true at lower IV. At higher IV levels, put spreads offer better premiums. How about writing bearish call spreads in a bear market and writing bullish put spread in a bull market? Or perhaps writing both? And then there's the possibility of practicing...