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Options are very useful instruments. They can be used alone e.g. buy calls
or puts; in conjunction with stock ,futures, or other entities the can be
used to protect profits, limit losses and many other strategies. I strongly
recommend reading up on options because of the many uses they can be put to.
Regarding the particular example first bear in might that would have
resulted in a credit to your account since the sale of the two options
would be greater than the purchase of the other two. If there a sideway move
let all options expire and you keep the original credit . If a move above
107 or below 105 you can sell all and the gain on the call and/or put
should be greater than the loss on any diferrential move on the put and call
sold. Another thing you can do is to leg out the two winning options on a
swing up and leg out the other two on a downswing. I do not recommend this
because it will leave you with one uncovered option. There are many creative
ways to use options from the simple to the complex .
P.S. Ira's post gave an example of how option use come to you as your
need for them arises.
Dom ----- Original
Message -----
From: "Prosper " <brente@xxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxx>
Sent: Monday, January 15, 2001 1:34 PM
Subject: [RT] Options question (buy both a bull and bear spread)
> Hi I have been thinking about Dom's suggestion. Seems that this idea
> may be a good one. How would a person manage the position after
> entering it, for example if the security goes no place but sideways.
> Or if it breaks out stronly one way or the other. Or if there is
> extreem volatility like the spoos have experienced over the last
> year. Thanks for you input and thanks to Dom for suggesting this.
>
> Prosper
>
> --- In realtraders@xxxxxxxxxxx, "dom perrino" <domenick@xxxx> wrote:
> > I beleive that's a vertical spread Something I suggest you might
> toss around
> > that would be more conservative is to consider a bull spread and a
> bear
> > spread at the same time(referred to as a box spread). In your
> example you
> > would sell one 106 call and sell one 106 put. You would also buy
> one 105 put
> > and buy one 107 call. . You have limited risk/limited reward,
> provided you
> > don't leg out of the bull or bear spread seperately.This is based
> on my
> > knowledge as applicable to stocks. I have not traded futures in a
> few years
> > If it works differently on futures someone will correct. There are
> numerous
> > strategies regarding options, some of which are very complex as
> seen here on
> > recent discussions..
> > Happy Holidays
> > Dom
> > ----- Original Message -----
> > From: "Prosper" <brente@xxxx>
> > To: "Real Traders" <realtraders@xxxxxxxxxxx>
> > Sent: Wednesday, December 20, 2000 10:34 PM
> > Subject: [RT] Options question for Ira and other options experts.
> >
> >
> > > Hi,
> > >
> > > I was thinking about an option play that would require that you
> buy one,
> > at
> > > the money put 3 to 6 months out. Then you buy 2 calls out of the
> money by
> > > two strikes. Or vise versa (buying a call and 2 puts). Example,
> buy 1 June
> > > 106 T-Bond call and buy 2 June 102 T-Bond puts.
> > >
> > > I don't know if there is a name for this kind of trade. I would
> like to
> > hear
> > > some of the pros and cons for this idea.
> > >
> > > Thanks,
> > >
> > > Prosper
> > >
> > >
> > >
> > > To unsubscribe from this group, send an email to:
> > > realtraders-unsubscribe@xxxxxxxxxxx
> > >
> > >
> > >
> > >
>
>
> To unsubscribe from this group, send an email to:
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>
>
>
>
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