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

To: the options strategist who wrote (853)	8/20/1999 11:40:00 AM
From: Ron Lambert	Read Replies (3) \| Respond to of 2317

The times I place credit spreads varies. I wait for the market to approach a defined target. My targets are designed to give me a 95% chance of staying out of the money. I can open these positions any time during the option month but have realized I can increase my gain significantly if I wait for the market to move towards and get close to either the call target or put target. Also, I have focused my attention only on the OEX at this time. The OEX provides me with the volatility I need to get good premium prices, allows for potentially two trades a month and gives me between 10 and 20% ROI for each trade. Realizing that 7% return per month compounded equals over 100% return per year, I'm happy. I'll define my first targets after the close today by multiplying the OEX by 1.075 for a call target and .941 for a put target. The I let the OEX move towards either target and when the credit for a ten point spread gets over 1 I start to consider opening a position. If the trend looks strong towards the position, I try and wait and get a 2 credit. But predicting the turns is tough, I got in a week early last month when the OEX took that two day upswing after the six days of hard down movement. So I only got 10% this month where I could have received 25% like you did if I had waited. Also, the OEX really only moved one way this month and I was unable to enter a safe second trade. That's how I do it.