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May 28th, 2007 at 5:26 pm
Wouldn’t this strategy be compatible with a large number of fairly volatile stocks? I would think that this would be a reasonably conservative strategy especially when employed within an account with portfolio margin. I think that the most concerning part of this strategy would be a large quick movement of the underlying that required a great deal of cash to repurchase either the put or call that was sold short. Is there any other serious concern when considering this strategy?