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

To: KFE who wrote (1561)	7/30/2000 12:27:50 AM
From: umbro	Read Replies (1) \| Respond to of 2317

Ken, on the OEX put calendar spread: Actually the spread has widened. The closing bid/asked spreads were 11-11 7/8 and 17 5/8-19 1/8. If you sold at the bid and bought at the asked the same spread would now cost you 8 1/8. [...] Never use the closing price of an option to determine a strategy because it may have no relation to the current quote. The underlying may have moved substantially from the last option trade. This is a big problem with some option screening services because the great looking trades they are touting have no relation to actual executable prices. Agreed, though I've also noticed that closing bid/asks aren't so great either, because it seems the MM's set them artificially wide at the close (not sure why). Still splitting the bid/asks is probably a lot better indication than last. Thanks for correcting my note. If the OEX was at the current level(776) at August expiration and the IV stayed at the current level then I would expect a profit of about 150% on the 5 3/4 pts invested. When I put on the spread I figured that it would be profitable if the OEX was between 740-805 at August expiration. Do you use an options modeling program? One you'd recommend? I have no plans to hold the long Sept. puts after the August expiration date. The FOMC meeting is two days after August expiration. Good observation, smart trade.