options, page-15

re: options/stelep7 Stelp

I have some questions for you. Could u answer them for me please?

U said -if you wanted to write puts you should have done it when cba was around 3210.....doing it now is not so wise

One reason for this is the premium would definitely be high. (because its closer to 32). When u do this what sort of stop do you employ? FOr example lets say CBA dropped to 32 or 31.9 2 days after you sold the p32 puts. Would you cut it immediately or wait?

My reason for suggesting this strategy now (ie when CBA is around 32.60) is based on a probability that the stock has a greater chance for staying at these levels or even rising due to the dividend next month. Ofcourse the premium is small. Also with this strategy because the premium is small if the stock drops say 30 cents there is a high chance that the put will double in price.

I would be greatly interested in your views.


I employed a similar strategy before NAB went ex. sold 28 july puts for 20 cents. They are just about worthless as we speak. This is what I wanted to do with CBA as well.