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Pastimes : Ask Steve -- Ignore unavailable to you. Want to Upgrade?


To: hpeace who wrote (4480)12/15/1997 11:24:00 PM
From: Lane  Respond to of 4749
 
you get about the same premium for them no matter which way you look at it when trying to place a $20 spread . i guess it doesn't make that much difference, but was thinking that at the money would give you more "immediate" protection than" falling to" a strike price below where you started..they might be able to manipulate the rime value more....its all about the same I guess.
No sunburn and not too many margaritas I hope!! (gggg)



To: hpeace who wrote (4480)12/16/1997 1:57:00 PM
From: ROB  Respond to of 4749
 
Steve,

Am relatively new to option investing, so forgive me if this question has an obvious answer.

YOu gave an example of a bull put spread on cpq whereby you would risk 5000.00 on 10 contracts with a profit potential of 20,000.00. I believe these were april contracts. My question is, why not just buy 10 calls, the risk would still be about 5k, but there would be no limit to your profits. other than the benefit of instant cash hitting your account, what other reason is there!?!