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Biotech / Medical : Biotech Short Candidates
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To: tuck who wrote (840)4/25/2007 10:21:13 AM
From: kenhott  Read Replies (1) of 897
 
We can probably keep this option chatter going indefinitely. One advantage of using a bear call spread (as an example) is the ability to close the sold call and hold the purchased call if the event turns out to be bullish. I use it as a form of protection. A recent example is DNDN. Yes one can always close a bear position then buy into a call and get to the same end position. But that requires multiple trades as the stock is going crazy vs. one trade. Just something like this may be the difference between making the right trade or not.

The reverse also works if the event is bearish. One can cover the sold put and hold on to the purchased put.

The central thought here is that a spread doesn't have to be put on at the same time or taken off at the same time.

<Kenhott called that one correctly, though it wasn't the hardest call to make.>

That's it. You don't get a fruit cake for christmas.
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