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Guy:
I've traded equity and index spreads in the past with limited success. At
the time I was trying out "textbook" call and bear spreads. I remember I
tried it out on Iomega and the stock shot 30 points past my short call. I
left a lot of money on the table because of that.
I've since come to the conclusion you need commit to the trade one way or
the other. I've noticed that inefficiencies in option premium usually don't
last too long. If you are fortunate at the time to exploit one, it should be
an instant winner. With the recent volatility in internet equities, I've
started to sell near month deep OTM puts and buy them back when premiums
shrink. However, I've recently noticed that put premiums on those stocks
have shrunk. Looks like a setup for a late summer rally.
I look at the recent volatility of equities and determine the OTM strike I
feel would be safe to sell premiums. The hard part is knowing when to close
your position for a gain or loss.
Thanks,
Marshall M. Liu
Senior Systems Analyst
(818) 549 - 6269
marshall.liu@xxxxxxxxxxxxx
> -----Original Message-----
> From: Guy Tann [SMTP:grt@xxxxxxxxxxxx]
> Sent: Tuesday, June 08, 1999 5:17 PM
> To: metastock@xxxxxxxxxxxxx
> Subject: RE: Bull/Bear Spreads?
>
> Walter
>
> We've never traded anything but futures. I've tried options a couple of
> times and lost money each time, and I'm not fond of losing money. <G>
>
> We used to do some spreads many years ago in the grains and back when it
> was
> legal, in Silver to move profits from one year to the next, but never
> actually evaluated it in terms of tying it to our normal trading system,
> where we trade completely uncovered. Our philosophy has always been to
> commit to a position, one way or the other and not hedge anything.
>
> Most of the spreads we've done have been like wheat/corn or beans/oil or
> meal. That sort of thing, but that was probably 40 years ago. We prefer
> to
> take uncovered positions since if you're right, you will be able to
> maximize
> your returns. It wasn't until I happened to look at the margin sheet that
> I
> noticed the big discrepancy in margin requirements between our regular
> trading and a bull or bear spread. Since we don't normally hedge our
> trades, my thought was to find out if this made any sense as compared with
> our normal trading system. Using the much smaller margin requirements,
> you
> wouldn't need too much in the way of the price difference to make a buck.
> I
> was looking at this to expand our trading possibilities using the same
> system.
>
> Since I don't have the data (I need the 1998 S&P futures data) I thought
> I'd
> throw it out on the list to see if anyone was using this technique, with
> or
> without success.
>
> Spreading to me is like copping your bet. By that I mean, you're really
> not
> too sure about your trade and want to cover your behind in case you're
> wrong. Years ago I learned from the old man that if I take a position and
> it goes against me, take the loss... Never, ever trade a spread since the
> only thing you've managed to do is to lock in the loss.
>
> Regards
>
> Guy
>
> -----Original Message-----
> From: owner-metastock@xxxxxxxxxxxxx
> [mailto:owner-metastock@xxxxxxxxxxxxx]On Behalf Of Walter Lake
> Sent: Tuesday, June 08, 1999 3:59 PM
> To: metastock@xxxxxxxxxxxxx
> Subject: Re: Bull/Bear Spreads?
>
>
> Hi Guy
>
> You're kidding me right? ... All these years you and your family have been
> trading the S&P etc.
>
> Best regards
>
> Walter
>
> ----- Original Message -----
> From: Guy Tann <grt@xxxxxxxxxxxx>
> To: Metastock <metastock@xxxxxxxxxxxxx>
> Sent: Tuesday, June 08, 1999 11:41 AM
> Subject: Bull/Bear Spreads?
>
>
> > All
> >
> > Is anyone using bull/bear spreads in trading futures? Just looking at
> the
> > spread margins, you might be able to gain significantly more leverage
> than
> > with pure futures trading.
> >
> > As an aside, does anyone know where I can pick up 1998 S&P history.
> Found
> a
> > historical site but their data ends with 1997. Too bad, as it looked
> pretty
> > good and the price was right.
> >
> > Thanks
> >
> > Guy
> >
> >
>
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