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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (1692)	5/23/2000 7:54:00 AM
From: GROUND ZERO™	Read Replies (1) \| Respond to of 33421

>>passing thought....how about short a sept SPU0 contract and write an at the money put and buy a June SPM0 and write an at the Money call?<< Now, that's an interesting idea... let me run it through a few number crunchers and see how it looks... tell me, how has such a spread done in the past? Also, is there enough time for such a longer term strategy to work with only four weeks to June expiration? It's an interesting idea... I'll check it out..... BTW, I don't know if these 1420's will expire worthless at this point, we may now be setting up for a rally of some proportions... a few days or a few weeks... we'll see soon enough..... bonds and the dollar are weaker this morning...<g> GZ

To: John Pitera who wrote (1692)	5/23/2000 8:26:00 AM
From: GROUND ZERO™	Read Replies (1) \| Respond to of 33421

After a little more thought on that option strategy, I don't know any advantage of holding a contract on either side of that spread... in other words, being both short a June call and Sept put, both at the money or even out of the money, is just as risky with or without the underlying contract... if the market moves out of the range of the sum of both premiums, then the spread will loose money... whatever you make with one contract, you'll give back with the other... it will generate more commissions, but no greater profits or lesser risk... premiums for the SP options don't really decay until about 30-40 days prior to expiration and after June goes off the board, you'd be holding a covered put position only... it's an interesting idea, but I think it requires a trading market... if these markets break one way or the other within that time period, the position could be in some trouble... your thoughts? GZ