Option Spreads, Credit my Debit Message Board

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Strategies & Market Trends : Option Spreads, Credit my Debit

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To: Dan Duchardt who wrote (2245)	2/7/2003 10:01:36 AM
From: Ira Player	Read Replies (2) of 2317

Dan, This type of trade is unique to "American Options", with early exercise. "European" puts this DITM would be selling at a discount. The professionals would buy them and exercise immediately, keeping the spread as the toll for the trade... With interest rates this low, I don't see why anyone would try this, especially with so little open interest before the trade. It's an "Interest rate arbitrage" and there is no interest to speak of... Note the open interest on the Jan 05 55's today -- 46007. I'm not sure why the other side held any of them. Usually, open interest in DITM puts is in the hands of retail "investors", not the pro's. Ira

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