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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Terry Maloney who wrote (79714)	4/17/2000 11:31:00 AM
From: Knighty Tin	Read Replies (2) \| Respond to of 132070

Terry, No, I don't have a link handy. But, they don't take long to explain. Effectively, you sell an at the money option and buy an out of the money option on a stock when premiums are fat. I usually use Leaps on real garbage, like internut stocks, because the premiums are outrageous. Of course, the fact that most of these cos. got idiots to fund their stock is also pretty outrageous. <g> However, some times I use the bigger tech names when their premiums get fat and I've made a bunch on names like Dell, Lucent and Cisco. O.K., here comes the twisteroo. You do a put credit spread when you are bullish and a call credit spread when you are bearish. These things have lots of advantages. They are low and limited risk. And, by having a diversified list, they become almost no risk. Also, if you get a quick pop your direction, you can segue into a butterfly by selling a bear spread to complement your bull spread or vice versa. The good news has been that I am mostly bearish, duh, so a lot of these fat premiums collapsed overnight.