Jimmy Option Trade Diary

Debit Leaps Spread

2009-02-01T23:04:00.001-08:00

These debit spreads are a way of buying expensive options that are good value at lower prices.E.g on April 2, 2001 , entered a Cisco spread where bought the Cisco Jan 03 17.5 call at 4 1/2 and sold the Cisco Jan 03 45 call at 1 for a spread price of 3.5 when Cisco was 13.1. 700% return if Cisco was above 45.

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The Diagonal Spread

2009-02-01T22:58:00.001-08:00

1. Sell or wrote an option where the strike price is about 3 to 5 points or further out-of the money.
2. Buy an option that expires 1 month or more after the option you have sold that has a strike price that is 2 2/1 to 5 points from the strike that you sold.
3. Try to get a credit or, at the very least, a very small debit for the spread price.
4. Set a stop-loss that is slightly in the money of the option that you have sold ( i.e a 55 call would have a stop at 56)
5. Try to select a spread where the option you are writing has less than 2 months before expiration.
6. Exit the spread when the stop is hit or at the expiration of the option you wrote or it that option loses most of its value.
7. With this trade you get a free option, the option you bought initially, so you could hang on to it, if you wish, after the option you have sold expires.

Example Buy BUD Jan 60 call at 0.6
Sell BUD Nov 55 call at 0.9

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The Ratio Hedge

2009-02-01T22:46:00.001-08:00

The key to success is to find some overpriced options. E.g , on April 30 of 2001, Rambus (RMBS) was at 16 and the Jan 2003 25 call was 8. Buying the stock and selling two Jan 03 calls at 8 gives us 16 points in premium, offsetting all the risk of owning the stock. However we are naked one option above 25.

This Strategy has a very wide profit range, from a Rambus price of 0-50.

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Index Credit Spreads

2009-02-01T22:29:00.001-08:00

1. Use index options.
2. Sell ( writes ) a far out of money index option.
3. Buy and index option that is 5, 10, or 15 points further out of money.
4. Make certain to get a credit of at least 0.45.
5. Enter such spreads with less than three weeks before expiration.
6.Set a stop-loss that is out of the money for the option you have written.
7. Set a stop-loss where there is an 85% chance of not touching the stop-loss.

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Put Writing With Leap

2008-12-26T20:39:00.001-08:00

Dec 26.08 SPY at 87.16 :

Buy 2 years SPY put at 60
Sell one month put at 71
Repeat every month.

.SWVMH SPY JAN 2009 60 Put 0.05 0.1 BTO 1 12/26/2008 11:29:21 PM Open
.SZCMS SPY JAN 2009 71 Put 0.26 0.34 STO 1 12/26/2008 11:29:21 PM Open

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Option Trade Dec 08

2008-12-23T05:00:00.000-08:00

Date	Action	Qty	Symbol	Description	Price	Commission	Net Amount
12/22/2008	Buy To Close	10	.UUFXC	UYG APR 1900 0 P			$0.00
12/16/2008	Buy To Close	2	.QPPXU	AINV DEC 7.5 Put	$0.300	$14.95	($74.95)
12/16/2008	Sell To Open	2	.GEWAT	GE JAN 2009 20 Call	$0.320	$14.95	$49.04
12/16/2008	Sell To Open	2	.GEWMN	GE JAN 2009 14 Put	$0.490	$14.95	$83.04
12/15/2008	Buy To Open	10	.UUFCI	UYG MAR 2009 9 Call	$0.700	$15.00	($715.00)
12/15/2008	Sell To Open	10	.UUFCG	UYG MAR 2009 7 Call	$1.000	$15.00	$984.99
12/2/2008	Sell To Open	2	.QPPXU	AINV DEC 7.5 Put	$0.800	$14.95	$145.04
12/2/2008	Sell To Open	10	.UUFXC	UYG DEC 3 Put	$0.150	$15.00	$134.99
12/2/2008				Initial Deposit			$5,000.00