|
| I do this fence sometimes. The only problem is deciding upon an exit strategy. If futures go above the strike price of the sold call, you have nothing left to gain, and margin money to pay in (plus the value in your bought put is decreasing rapidly,while the sold call is now costing you penny for penny as the market moves up). If the market drops, you have established a futures floor.
I usually try to draw line in the sand and have a point where the value of the sold call plus bought put and futures price are maximized (this is a guess, depeinding on volatility, time remaining, and futures price).
The reason for doing this is you still have some upside potential (futures), have not set delivery point or basis, and all for little cost.
Just my opinion | |
|
Options question?
