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Strategies & Market Trends : The Options Box -- Ignore unavailable to you. Want to Upgrade?

To: Jill who wrote (1185)	6/2/2000 12:25:00 PM
From: SecularBull	Read Replies (2) \| Respond to of 10876

On a bear spread, you execute both trades at the same time to reduce the total cost of the purchase of the long put position. Yes, you have the potential to make much more profit doing it the way that you suggested, but there are some problems with that: 1) you do not recoup any of the cost of the long side until you sell the short side. This means that you're out of pocket that amount until you do sell, and 2) who's to say that the price will actually go down? You limit your risk today be selling the underlying short put today. I have picked a range that I think the stock will safely trade within. I see delaying the sale of the short side as more of a gamble than I am willing to take. Regards, LoF