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Strategies & Market Trends : Option Spreads, Credit my Debit
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To: jjs_ynot who wrote (1328)4/3/2000 11:49:00 PM
From: KFE  Read Replies (1) of 2317
 
Dave,

I have some short puts that I was planning to turn into a Butterfly by purchasing 1/2 the amount above the strike price (creating a bear debit spread) and 1/2 below (creating a bull debit spread).

You would have a long butterfly spread and the margin required would be the net debit (if any) paid for all the options involved. In this case the amount you pay for the long puts will be the only margin or deposit required. If you are able to buy the puts for less than the credit received on the shorts you would have a locked in profit.

A short butterfly spread with puts would require the difference between the highest strike prices and the credit received on the short options could be applied towards the requirement.

Regards,

Ken
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