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

To: jjs_ynot who wrote (1057)	12/22/1999 3:49:00 PM
From: KFE	Read Replies (2) \| Respond to of 2317

Dave, The OEX spread blew right past my mental stop on a gap opening after the release of good economic data prior to the opening. After opening rotation I would have needed to pay $7 to close the spread. I decided to leg out at that point (something I don't like to do very often). The momentum was all to the upside so I covered the short first and when I could cover the long for a total $6 debit I sold the long side. The net loss was $1. If I waited longer to cover the long side I actually would have made a profit but my original intention was to limit my exposure to $1 loss so when it hit that point I covered. This trade exposes a potential weakness in my trading plan of strict stop points. A gap opening or volatile movement during open rotation can render a stop point useless. A nice point about spreads is that even if this happens you still have a chance at a profit by legging out. My SDS credit put spread finished right at my short strike so I didn't have to cover anything and the entire credit was profit. Regards, Ken