|
| Say you sold a $13 call and sold a $13 put at the same time on november 08 soybeans with the intent of harvesting the erosion of time values over a few months time.
Would the loss on one option be offset by a corresponding gain on the other? Or nearly so? The option values would be worth approximatly $3 today.
The same $13 call and put for July 08 are valued at roughly $1.50.
Thus the time value looks like it erodes about a $1.50 the closer you get to maturity at these prices. Is this just looney logic or is there a real opportunity to capture some serious return on investment? Or is there some serious pitfalls to consider other than margin money? Or would the gains on one option support the losses on the other?
The initial risk would be $15 k to trade one contract with the potential to earn $7500 or 50% on the intital investment. Tell me why it won't work.
Edited by Don Kraft 5/7/2008 19:29
| |
|
Do any of you trade options in this manner?
