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

To: Allen Furlan who wrote (2284)	7/22/2003 4:41:07 PM
From: Bridge Player	Read Replies (2) \| Respond to of 2317

Allan, I was interested in your comments on AMR. On July 1 I sold short both August 12 1/2 calls and August 9 puts on AMR for an acceptable total premium of over $1.60 per contract. (Would this be called a short strangle?). I plan to accept assignment on either side, thus being short AMR at an effective price of 14.10 or long at an effective price of 7.40, and write Sep or a later month of calls if assigned long or puts if assigned short. I like the odds on trades like this. The return on margin is smaller than in your example but in a much shorter time frame. BTW, if in your example the SGR price goes up your margin requirement on the short 2005 puts would decrease, not increase, because the strike would be farther out of the money.