Discussion in 'Trading' started by GreenDog, Jul 10, 2002.
long PYPL, short .39 EBAY
Risk premium high (~ 2.5 points).
EBAY 59.87 (*0.39=23.34)
How did you get 2.5 points?
I could tell you as well, but then I would have to kill you...
I've built similar situations like this myself, turning profitable options into straddles. Haven't done it with this pair, but if I were already in a profitable EBAY short, then I would look hard at "covering" with equivalent PYPL. If I later thought that it was time to trade long I might use PYPL then sell-out by shorting EBAY....collecting premium along the way. Of course, the premium collected assumes that the deal closes or the spread collapses for some other reason....like it did a month ago.
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