Replies to post #238 on ~TA FAnaTick$~

[blasher]

~6979~ . . you forgot one more calculation you must do before entering this position . . .
Your "Ford drops below $12.50" Plan.
Forgetting option-price decay for the moment . . .
~F~ can drop to 12.50 - 0.57 = $11.93 and you would still break-even
BUT, you must also take into account option-price decay . . .
so after several months, if ~F~ were to drop to 11.93,
you would NOT be able to see the Jan 12.50 call @ 3.20 - 0.57 = $2.63
so you would actually fall below break-even.
BUT, you would have to factor in the Profits you have made during those several months . . .
so you would STILL be ahead of the game.
AND .. let's not forget that commissions would also be eating some of your Profits as well.
It does get to be complicated mathematically . . .
but if your underlying stock action is behaving, it is a nice longer-term plan.
However, since correct market-action-direction forecasting is still necessary,
I have chose to just Trade the straight directional Options/ETFs and get in/out of them as they are Profitable.
Good Board you have here !!!