Re: [RT] option spread

[Ben <profitok@xxxxxxxxxxxxx>]

if stock goes up 1$

then

you buy back to close the short  puts at profit and close the short calls at loss

but  also sell the  long calls at profit,

 

if we go down 1$

 

buy back to close the short calls

buy back at loss the short puts

but sell to close the long puts

 

so all bases are covered

and if you do nothing

you  get to keep the credit in your accounts as long as it trades plus or minis 75 cents

Ben

----- Original Message -----

From: mr.ira

To: realtraders@xxxxxxxxxxxxxxx

Sent: Monday, August 29, 2005 12:24 PM

Subject: Re: [RT] option spread

If you can get those prices I don't see anything wrong with that spread.  A simple outside combination with 1 point of risk for 1.5 in reward.  You have a basic gamma neutral spread. 

 

Now comes the question.  Do you trade it or hold it?  I assume that the targets for movement of the underlying, up and down, fall within your profit parameters if it is a hold situation. 

 

Will the volatility of the underlying allow it to stay within that 1.5 point range on either side of the current price or will adjustments be necessary.  I know you have a plan, but those that are looking at this and saying, easy money, won't understand how to adjust the spread if price starts to move in either direction.    There are dozens of solutions to this problem.  How would you handle that?

 

Ira.

----- Original Message -----

From: Ben

To: realtraders@xxxxxxxxxxxxxxx

Sent: Monday, August 29, 2005 9:07 AM

Subject: [RT] option spread

whats wrong with this ?

 

 

stock at 16.45

 

 

sell  sep 17.5 calls at 1.85 10

 

buy  sep 20 at 1.15 10

 

 

sell sep 15 puts at  1.6   10 contracts

 

buy sep 12.5 at .8          10 contracts

Ben

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