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Strategies & Market Trends : Option Spreads, Credit my Debit

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To: Steve_GTS who wrote (1539)	7/18/2000 10:22:07 PM
From: jjs_ynot	Read Replies (1) of 2317

Steve, Let me just review the trades: You bought ALSC Jan 17.5 calls for $9.375 Some time later you sold Jan 20 calls for $10. You then had a guaranteed profit of $.625 per contract Max profit is $2.5 per contract - ALSC closes over $20. in Jan Min Profit is $.625 per contract -ALSC closes at $17.5 or below. Now you increased your net investment by $6.125 - $.625 = $5.5 per contract to gain more potential upside potential by moving the short side to the Jan $30. calls. New Position: Max Profit - $12.5 per contract for ALSC above 30 Breakeven - $5.5 recovered per contract for ALSC at 23 Max Loss - $5.5 lost per contract for ALSC at or below $17.5 It doesn't seem that rolling so high was the best choice since you lost your guaranteed profit. Perhaps rolling a little higher would have been a better choice. It always pays to look at the max profit, breakeven, and max loss of a position. Regards, Dave

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