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Strategies & Market Trends : Arbitrage Plays -- Ignore unavailable to you. Want to Upgrade?

To: Topannuity who wrote (319)	4/27/2001 11:31:07 AM
From: Allen Furlan	Read Replies (1) \| Respond to of 376

Top, I do have some July spreads but my initial position was to buy an Oct bull spread on mcdta buying the 15 and selling the 55 and then paying for that spread with a short mdct Oct 22 1/2. I think these stocks are way overvalued and am willing to take the risk that they will not be in the high 40's by Oct. The out of pocket costs are zero and the margin set aside is 20% of stock price plus option price. This can be based on marginable value of stocks in your portfolio. The market mis-pricing may very well take until October to correct. Your example uses July prices. I think a similar strategy with Oct is very reasonable approach. There are obviously many permutations.