stockfetcher01
25 posts
msg #83855
- Ignore stockfetcher01 |
12/4/2009 3:43:13 PM
Hello eveyone,
I was hoping someone knows about the strategy Jim Cramer discusses in his new book. He basically proposes
buying DITM calls and selling the underlying stock short. He said this combination with the DITM call as a hedge is a winning play.
He doesnt do a good job explaining the details. I was hoping someone here could tell me more about the strategy and the ratios of shorts to calls etc.
Thanks Stockfetchers for any feed back,
SF01 from New orleans
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Eman93
4,750 posts
msg #83859
- Ignore Eman93 |
12/4/2009 4:22:18 PM
I would paper trade it until you can make money at it...
You would need to figure out how much (etiher way) up or down the stock needs to move in order to profit....
You still need to manage the trade... If the stock goes up where do you cover...... if it goes down when do get rid of call option... all this needs to be planned out....
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Eman93
4,750 posts
msg #83860
- Ignore Eman93 |
12/4/2009 4:25:24 PM
Coverd calls are prob the most easy to trade......
Find a high voltilty stock near the bottom of its range.... or any stock you are holding long term and sell the calls.....
You get paid for selling your stock.
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TheRumpledOne
6,411 posts
msg #103443
- Ignore TheRumpledOne |
11/22/2011 5:39:34 PM
Too funny...
http://www.timothysykes.com/2011/11/the-sad-hypocrisy-of-jim-cramer-who-once-again-picked-a-stock-just-before-its-collapse/
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guru_trader
485 posts
msg #103454
- Ignore guru_trader |
11/24/2011 12:29:54 AM
great post tro ... or, watch any of don harrold's videos (http://www.youtube.com/user/donharrold) on cramer and you'll be running away from cramer as fast as you can
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wkloss
231 posts
msg #103458
- Ignore wkloss |
11/24/2011 3:56:29 PM
Graphing this in OptionVue looks terrible.
Does anyone understand what his thinking is?
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gmg733
788 posts
msg #103475
- Ignore gmg733 |
11/26/2011 9:27:03 AM
I have not read his book, nor will I, but sounds like a delta trade. Short 100 shares with a delta of -1 per share for an-100 position delta and buy Ditm calls to offset he negative delta. Stock goes up and gamma helps out the net position delta go more positive and have a long bias. It would have to be long dated calls so theta is not eating away at your premium.
Again I am guessing as I have not read the book. This is a market maker strategy to have zero net position delta and make money in changes in gamma. Some contend this is where the big money on he floor is made. You have no bias long or short, but make money when the position moves either way.
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wkloss
231 posts
msg #103483
- Ignore wkloss |
11/26/2011 5:29:28 PM
stockfetcher01
Can you give us any more information about how this thing is constructed? gmg733 makes a lot of sense with his post but I still haven't been able to graph this concept to where it makes any sense. It appears to take a major move to reach break even. It's a negative theta trade so it costs money every day while you wait for profitability.
How DITM for the calls? I tried strikes near 100 delta with no luck.
Bill
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