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March 5th, 2007 at 3:35 am
Great article Sage. It looks like the answer was right in front of me the whole time. ( No wonder I had to ride the Short Bus when I was a kid).
I truly want to get into the LTP options asap but I want to have a good working knowledge of the possible outcomes , risks involved and learn how to manage those risks before they happen rather than after they happen. I see the great benefits of leverage with options but I have a lot of respect for their unforgiving effects if they go against me due to my lack of understanding. ( And truly that is what risk management is all about, knowing the risks , possible outcomes and having good countermeasures availble if needed to reduce the risk )
I am very surprised that the LTP did so well this week . Correct me if I am wrong but the loss in underlying stock price was offset by a raise in VI on the price of LT options this week. If that is the case then it would seem that the LTP could loose value if ( BIG IF ) the VI in the market settles down back to 11 or so. If we have a couple more 3 point drops in the market in the week week of so will the LTP continue to do as well?
Thanks for all your time and effort on this issue
Turtle from the Short Bus