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Strategies & Market Trends : Option Spreads, Credit my Debit
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To: KFE who wrote (1803)11/27/2000 9:36:24 PM
From: Dan Duchardt  Read Replies (1) of 2317
 
Ken,

To one that is newer to the game, it seems like a relatively high risk for relatively little reward. If EBAY holds on to at least 30, you get to keep the 1_1/4 credit, but if it should fall below 25 you could lose 3_3/4. Could you comment on how you manage the risk in a position like this?

I have a single contract JAN30-40 put credit spread ($6) on GX that is now fully devalued. On the way down I could have stopped out with a smaller loss than the $4 I am now looking at, but I figured I might be able to sell the 30 at "the fall bottom" and ride the short during the winter rally, if it ever comes. This was a learning case for me, so your thoughts would be appreciated.

Dan
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