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Strategies & Market Trends : Option Spreads, Credit my Debit
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To: NateC who wrote (1007)10/24/1999 12:30:00 PM
From: Jon Tara   of 2317
 
It computes.

The close-in options are under-valued.

I corrected my mis-perception earlier.

The spread should widen over time. That is, as we get closer to April, the spread should become wider. The spread on nearer-term strikes should also be wider than that on further-out strikes.

If the November spread is the same price as the April, then, either the November is under-valued, or the April is over-valued.
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