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

To: Jon Tara who wrote (1096)	1/5/2000 8:34:00 AM
From: jjs_ynot	Read Replies (1) \| Respond to of 2317

Jon, I looked at IIX yesterday. Liquidity is thin even for IIX and bid/ask spreads can get fairly large. Dave

To: Jon Tara who wrote (1096)	1/5/2000 10:40:00 AM
From: KFE	Read Replies (1) \| Respond to of 2317

Jon, That was a nice credit for that trade. As far as risk/reward in credit spreads there are two risk/reward factors that should be looked at. The first is the dollar amount at risk and the second is the risk/reward of the probability of finishing ITM at expiration. A larger credit on an ATM spread might actually be more risky than an OTM spread for a lesser credit. I also believe that your risk is what you let it be. I use mental stop points that usually limit my loss in credit spreads to an amount equal to my credit received. It has worked very well for me . I legged-in to this position I just wanted to get my feet wet, and this was the safest thing I could think of in semi-panic mode These two statements seem to contradict each other. I don't believe that spreads should be legged into if your purpose of using them in the first place was to limit your risk. If you really think that you have a feeling for the direction of the underlying then play it by trading the underlying or option purchase. When legging into a spread you leave yourself open to full market risk. You should also be able to trade between the bid/asked spread when placing the order as a spread. I have to admit that I have broken this rule in the past but I have learned my lesson. I still occasionally leg out of a spread that has gone against me but I do it with full knowledge of the risks involved. Options on the HHH internet trust have started trading. I have shorted it twice so far and got lucky(can be shorted on down ticks). I haven't traded options on it or the IIX mainly due to the wide bid/asked spread. Good luck with QQQ spread. Regards, Ken

To: Jon Tara who wrote (1096)	1/8/2000 4:12:00 PM
From: OX	Respond to of 2317

[I'm working my way backwards thru the posts] Jon, It took me a couple of read of this line and then it dawned on me what you meant: "Since it's on the QQQ, I will have to pay commissions to close out at least the short side on the way out." I will not harp on this, but if you're going to leg in and out, you should really do yourself a favor and get approval for uncovered writing. It will reduce the amount of real time decisions you have to make by an order of magnitude. My one warning, w/ as fast as PT app is, is make sure you enter the right option symbol before you short an option. It only took me once to realize how fast PT really is--luckily I was able to reverse it w/o any real damage. <now able to grin about it>