Option Traders: The Weather Outside Has Changed Dramatically!
Option Volatilities in
three- to four-month options are down
substantially over the last four weeks. Covered writers are missing a great chance to
improve their risk/reward profile by replacing long stock with 5-10%
in-the-money calls. Decreased volatility in three- to four-month options has
presented some intriguing possibilities. With all of these strategies, as near-term expires, I would then sell the next month against my long option.
| Symbol |
Price |
3-Month Option Today |
3-Month Option 4 Weeks Ago |
Stock Range Since Jan. 1 |
Option Idea |
|||
| Side | Lot | Option | Price | |||||
| AOL | 48.90 | 52 | 70 | 32-57 | Buy | 5 | Apr 42 1/2 |
9 1/2 |
| Sell | 5 | Feb 50 |
1 3/4 |
|||||
| AMD | 23.63 | 72 | 98 | 14-26 | Buy | 5 | Apr 20 |
5 1/2 |
| Sell | 5 | Mar 25 |
1 11/16 |
|||||
| CSCO | 34.62 | 69 | 87 | 32-44 | Buy | 5 | Apr 30 |
7 1/4 |
| Sell | 5 | Feb 35 |
2 1/8 |
|||||
| DELL | 24.50 | 59 | 71 | 17-28 | Buy | 5 | Mar 20 |
6 1/4 |
| Sell | 5 | Feb 25 |
1 1/8 |
|||||
| HWP | 35.49 | 63 | 67 | 30-38 | Buy | 5 | Mar 30 |
8 |
| Sell | 5 | Feb 35 |
2 1/4 |
|||||
| IBM | 111.51 | 38 | 50 | 84-116 | Buy | 5 | Apr 100 |
16 |
| Sell | 5 | Feb 110 |
4 | |||||
| INTC | 34.81 | 55 | 66 | 30-39 | Buy | 5 | Apr 30 |
6 |
| Sell | 5 | Mar 35 |
2 3/8 |
|||||
| LSI | 22 | 76 | 101 | 17-26 | Buy | 5 | Apr 17 1/2 |
5 5/8 |
| Sell | 5 | Mar 22 1/2 |
2 | |||||
| MSFT | 61.43 | 40 | 61 | 43-64 | Buy | 5 | Apr 55 |
9 |
| Sell | 5 | Mar 60 |
4 1/4 |
|||||
| SUNW | 28.25 | 70 | 89 | 25-35 | Buy | 5 | Apr 25 |
5 5/8 |
| Sell | 5 | Mar 30 |
2 | |||||
| WCOM | 21.25 | 61 | 81 | 16-23 | Buy | 5 | Jun 17 1/2 |
5 1/2 |
| Sell | 5 | Mar 22 1/2 |
1 1/2 |
|||||
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