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To: Ed Frye who wrote (3819)	3/19/1998 11:05:00 PM
From: Brett Nelson	Respond to of 18016

There is one other major assumption in this scenario - that you can successfully "leg into" this spread by selling the June 35 for $3. What happens if you buy the Jun 25 for $6 3/4 and the stock immediately heads south? You would likely have to hold the long call with white knuckles or tighten the spread by selling the June 30s. Either way, you assume a greater deal of risk by buying the in the money calls with the intention of later selling an out of the money call. Good luck, Brett

To: Ed Frye who wrote (3819)	3/20/1998 12:20:00 AM
From: Dennis J.	Respond to of 18016

Thanks Ed and Brett for your comments. Nice to see you are analyzing these call situations and thinking about them. When I said "you get", I meant you received this much back for your 6 3/4 initial purchase. With the stock at 32, this would have been a breakeven trade if held to expiration without the 30/35 spread. My style is to buy both in-the-money and 3-6 months of time. Sometimes out-of-the-money, but always lots of time. In-the-money's are somewhat neglected. Yes you have more at risk, but you also buy less premium. The 25's in my example at 6 3/4 had 1 3/4 premium, while I guess the 30's would have cost about 4-4 1/4, which was mostly premium. The delta's are also higher on ITM's. It's just a matter of style. Spreads can be initiated on any initial position, once the stock has risen to near a higher strike. You get somebody elses premium, reducing your investment basis. You can go all the way to expiration, and the one you sold may expire worthless. Just another way to pad the return with some safety. I do a few in-the-money next-month trades, when I want a high-delta for a quick play. Bought Dell Apr 67 1/2 put's today, looking for a quick play off the double bottom. Little premium, and the option moves like the stock. Keep up the dialog; its good for all of us.