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Pastimes : Ask Steve

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To: hpeace who wrote (4453)12/10/1997 9:42:00 PM
From: Robert Graham  Read Replies (1) of 4749
 
Hello Steve!

I see you are alive and kicking, Steve! Good.

Can you tell me in practical terms what the advantages and disadvantages to a bull spread are? Or for that matter any kind of spread? I think it limits upside potential but at the same time limits downside risk, but I hear it can be tricky in terms of choosing the stock to work this with and how to step into it and unroll. I hear that sometimes when the stock does what you think it will, you do not make as much as you were expecting, and it even can work against you. This is what I remember from a book on options that I read somewhere, sometime. And then there is the vertical bear spread.

Bob Graham
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