[realtraders] credit spreads(puts and calls at same time) {02}

["Gary Fritz" <fritz@xxxxxxxx>]

Ben wrote:
> an  easy way  to do this is what i do all year
> i sell   DEC   825 oex calls and buy  DEC  830 calls
> i sell   DEC   700puts and buy  DEC  695 puts
> on a 250000  mutual  funds portfolio  i do  30  per month
> and   never have to worry
> (Max loss  is   15 times  500   minus  premium  collected)
> this  works   9  month out of   12

Sounds good!  Could Ben or someone else clarify this, in teensy tiny 
words, for those of us without a lot of options background?

Ben said he puts on a spread 5% above/below current prices.  But 825 
and 700 looks more like about 8.6% above/below the center price of 
760 or so?

What do you mean by "on a 250k portfolio you do 30 per month" -- do 
you mean it takes $250k/30=$8333 to put on one of these spreads, so 
you do 30 of them in your account?  (What about the premium 
collected?)  Or are there 30 different opportunities that arise each 
month?

What is the expected gain from this 4-step spread?  In another note 
Ben said he "looks for $3000" -- so do you make $3000 in 9 months, 
and lose 15*$500 = $7500 in the other 3 months?  What situations 
cause the $7500 loss?

Thanks,
Gary