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Re: romuluss post# 5937

Sunday, 02/06/2011 5:22:29 PM

Sunday, February 06, 2011 5:22:29 PM

Post# of 11305
romulas

If you do believe it dearly, you could buy Synthetic CALL option 50 strike price at the cost of the difference between stock and strike price.

Let's say IDCC is now at $50.80 You could buy Synthetic long option 50 (almost any month) at about 80 cents ($50.80-$50=$0.80) Basically you could control 1 shares of stock for 80 cents or ~$80 per one contract (Use cash from selling PUT 50 to finance buying CALL 50).

It like buying house with no money down (or minimum cost). However the value of it up (or down) $1 per $1 with stock price. If IDCC become $60, The value would be $1000. If IDCC become $40, you would lose $1000. However you need to have gut and have margin power. The longer month strike price would cost more margin power. If value drop, margin requirement increase.

If you do in Feb month, it probably cost $1160 (margin power)
If you do in Mar month , it would cost $1300 (margin power)

Since it no real cash outlay that much you would not pay any interest as long as you have POSITIVE cash in the account.

I have done that with so many stocks that have real strong UPTREND including IDCC at 45 and 50 strike price for many out months. It really work in general up market and individual stocks on the uptrend. When trend change, you have to close it out fast.

If you do it right and stock move the same direction, You could double or triple your portfolio in short time. Gamble go both way.
You also could be in poor house so quick if it move other way.




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