Buying In the Money Options Message Board

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Strategies & Market Trends : Buying In the Money Options

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To: EasyWay who wrote (8)	10/8/2000 11:32:53 AM
From: High Grader	Read Replies (2) of 21

I like to look for spreads in what I call the "Spread Zone." To find a "Spread Zone," look for a breakout above and old high with an Elliott Wave pattern that gives you a Fibonacci Target and a potential higher top. You have to wait for the breakout to confirm the pattern. Pick a spread between the old high value and the possible target. Try and select a spread that will be closed before the price reaches the Fibonacci target. Such spreads are often very cheap. The biggest problem is getting a fill on them as the brokers seem to grab them for themselves once you alert them to the fact that they are there. Have seen many of these run from as little as a quarter or less, to a full close of the spread. If the Fibonacci target is close to the upper option strike price you are better off taking less than the full spread as soon as the price gets near the target, if the indicators show it is running out of steam. Indicator used is a short term RSI mainly,as soon as it diverges or even gets above the upper 70 level be ready to exit.

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