Option Spreads, Credit my Debit Message Board

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Strategies & Market Trends : Option Spreads, Credit my Debit

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To: Ron Lambert who wrote (796)	7/11/1999 11:00:00 PM
From: KFE	of 2317

Ron, I would like to know about stop loss techniques. If you have a credit spread that has gone against you it has been suggested that you can roll it out or up. Don't confuse rolling options with a stop loss technique. When an option is rolled up, down, or out there is still market risk involved. What is the ruling on margin requirements in this particular situation? Credit spread margin requirements are based on the difference between the strike prices and require equity in the account not necessarily cash. Any loss on the cover of the first spread will reduce the equity in the account. Any increase in the difference between strike prices in the second trade will raise the margin requirements.The number of contracts that can be done in the second trade you mention could be affected by either of the above. Regards. Ken

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