Showing posts with the label stray-dog-solution

Eliminating Dogs- Introduction

Eliminating Dogs Introduction So far, I have considered the effect of selling at-the-money puts on the entire universe of  217 stocks that had LEAPS on March 31, 1997. You saw that 77.7 percent of the time,  the stock closed out of the money, and for every $8,354 received in premiums and  interest on expired LEAPS, the net amount retained was $3,559. The remaining portion  of the premiums and interest, $5,620, was needed to close out losing positions. Because  of the longer expiration time involved, the net amount retained on the far-term LEAPS  averaged out to 48.1 percent, while on the near-term LEAPS the net amount retained  averaged out to just 36 percent.  Finally, the account balance at the end of the ten-year  period was 44.3 percent of the total premiums ever collected.  Such results are hardly worth boasting about. One way to improve them might be to  restrict the sale of LEAP puts to better-quality issues. I'll investigate what  would have happened if I