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Strategies & Market Trends : Option Spreads, Credit my Debit -- Ignore unavailable to you. Want to Upgrade?

To: Ron Lambert who wrote (820)	8/13/1999 8:25:00 PM
From: dealmakr	Read Replies (1) \| Respond to of 2317

Ron, 10% on a vertical credit spread is nothing to sneeze at for a monthly return on capital. Let us know how you make out. Good Trading Dave

To: Ron Lambert who wrote (820)	8/13/1999 9:45:00 PM
From: KFE	Read Replies (1) \| Respond to of 2317

Ron, I watched your plays last month and was wondering how you derived your targets for your credit spreads? When I look for credit spreads it is usually with two weeks or less to expiration and out of the money (the deeper the better). I look for at least $1 credit on a five point spread. Depending on how I feel about the underlying or general market they can be either puts or calls. The part that I have learned to be inflexible about is the exit point. I will unwind in all circumstances if the short option becomes in the money by closing the entire spread or just the short option if I feel the movement of the underlying will continue in the same direction. Sometimes (not often) I will cover before the short option gets in the money if I feel strongly about the market. This firm exit strategy generally means that I am putting at risk the same amount that I stand to gain. Possible exception to this would be a gap opening or large movement during opening rotation and exit is not possible. Regards, Ken