Strangle Update

Friday the 25th was an interesting start to my 'long strangle'. RIMM opened the day by gapping up to almost 100 and then sliding down all day to close near 90. So had I chosen to close my positions, I would have made a 50% profit on my call, and then around a 20% profit on my put for a combined profit of 70%. Pretty remarkable swings if you ask me. I still am uncertain if I need to go ahead and enter an order on both sides for 100% so that I am covered, or if I can take 50% per side and run with it.

In other news, I seem to be the only person in the world bearish going into tomorrow. The market went up all day (Monday) and everyone I read or listened to seem to think the rate cut is a reason to ignore the GREAT housing numbers that came out. And I could be wrong, but I was under the impression everyone already knew about the rate cut, so why exactly did everyone wait until today for it to make a difference?

Sooooo, long story short. I bought puts. I love it, and I will take my medicine like a man if I am wrong. Here are the details.

+10 RIMM ~ 90 strike put @ 4.35 = $4350 + $24.95 = $4374.95 total
+10 QQQQ ~ 44 strike put @ 1.20 = $1200 + $24.95 = $1224.95 total
+10 YHOO ~ 20 strike put @ 1.00 = $1000 + $24.95 = $1024.95 total

All are current month (ex. Feb 08 exp) unless otherwise noted. I thought long and hard about Bidu, but I really wanted it to get back to 300 before I opened a position. I missed it in the morning for the short time it was there, and could never convince myself I liked 293. So there we are.

Wish everyone out there the best, have a good day.

Stock Option Research

So today I began research on an options trade called a 'long strangle'. Hopefully this refers to the position of my trade and not the position I end up in. So with a fairly basic overview of a daily RIMM chart (using the thinkorswim software) it seemed that this would be a good stock to try the trade on. I tend to stick with well known stocks, but I also look for big swings that are fairly consistent.

So with about 15 minutes to close, the stock had opened at 89.96 and was up to 94.53, and here are the details...

Bought +10 RIMM (feb 08 exp) 95 strike call @ $5.65 = $5650 + $24.95 = $5674.95 total
Bought +10 RIMM (feb 08 exp) 90 strike put @ $3.80 = $3800 + $24.95 = $3824.95 total

My overall goal is generally a 20-30% profit overall, but since I have zero experience with the 'long strangle', I really have no idea what to expect. I am not entirely sure what to do if one side of the position profits, but not enough to cover the other side. With the volatility that has become common in the last few months, I am very curious what exit strategies will emerge.

Since I am very new to this, I would enjoy hearing any thoughts, opinions, or experience on the subject of the 'long strangle'.