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Strategies & Market Trends : Selling Puts: Have Cash Will Travel -- Ignore unavailable to you. Want to Upgrade?

To: the options strategist who wrote (755)	12/19/1999 12:30:00 PM
From: Dan Duchardt	Read Replies (2) \| Respond to of 1235

JJ, I've done some CCing, and looked at calendar spreads with LEAPs, but have never done a credit spread. I do not have a complete grasp of the risk/reward, so I'm not about to jump into one yet. I read your earlier post with some interest; it was indeed a nice return on a relatively small (compared to owning the stock) investment. It was a high risk play and one would need to be both nimble and willing to lose their prem. I wonder if you would be willing to elaborate on the risk. I pulled up the options chain for OEX, but since everything is a month out now, I cannot see the prices you were getting. Isn't the risk here more than what it cost you to get into the positions? Worst case, on 5 contracts with a strike spread of 10, aren't you risking $5,000 on each spread? In your original note you said: Since the market was in a tight consolidation mode mon thru thur I did not have to be too uptight. Matter of fact it was a great non-stressful play. And in this note you are talking about volatility. Can I assume you want volatility to give you an opportunity to profit on both sides (call and put spreads), but NOT want a trend that would push either side too far? Is there safety in playing both sides so that if the stock breaks in one direction, one position will lose and the other will offset the loss? I'm sure I can research this elsewhere, but a summary based on this example would be helpful if you have the time. TIA Dan