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

To: FRANK J who wrote (1651)	9/7/2000 11:38:38 AM
From: KFE	Read Replies (1) \| Respond to of 2317

Frank, what do you mean by "breakeven" pt? wouldn't you wait until there is a certain "net" credit before you close? what am i missing? First, you must have a trading plan and follow that plan. My plan on this trade is that QQQ trades below 100 at expiration and all the options expire worthless and I don't have to do anything. My cover plan on this trade and most OTM credit spreads is to put a mental stop at my expiration breakeven point which is 101 3/8. This would be similar to placing a stop loss on a stock. This should limit my potential loss to the same or lesser amount as my potential gain. In this trade it should limit my potential loss to 1/4- 3/8 points. If QQQ hits 101 3/8 I should be able to cover the spread for 1 5/8 or 1 3/4 and thus my loss would be 1/4- 3/8 points. I thought that this presented a good risk/reward and that is why I put on the trade. i do a lot of otm 6 month spreads 2.5 to 5 pts apart, and also oex front month @ 5 pts OTM front month OEX credit spreads are something that I and others on this thread do often. My cover point on those is when the short option becomes in the money. I believe in having strict stops on trades because the only thing that can hurt a good trader is a catastrophic loss caused by poor money management. You must live to trade another day. Regards, Ken