Thursday, July 30, 2009
MET
I said a few days ago that the closer we got to S&P 1000 the more I would be inclined to lighten up or liquidate my Jan 11 MET and JPM spreads. I closed out 5 of the 20 on MET. I think every few bucks I have to close out some more. Next target will be $40 for JPM and $35 for MET. That would put both $5 above the naked call, so would be time to lighten up. Although here is the paradox, the higher above the naked strike they get, the more room I have to fall and still reap 100% of the possible gain. I've played with the number and I really need these to be about $10 above the naked strike to get about 80% of the max possible gain. If we got that high I would sacrifice the other 20% for getting out 18 months early.
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SO JPM is .02 away from from your $40 target, will you take your profits today?
ReplyDeleteMaybe, depends on how much time premium I'll be giving up. After looking at the 5 MET I closed out last week, I'm not feeling so good about it. I paid $6 for something that is worth nothing. I have set a tentative threshold of 75% of the maximum possible gain and I would be willing to take the play off.
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