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Strategies & Market Trends : Advanced Option Strategies -- Ignore unavailable to you. Want to Upgrade?

To: ringo99 who wrote (203)	9/9/1998 5:49:00 PM
From: EJ	Read Replies (3) \| Respond to of 355

A strategy that works real well is to simply do one part of the butterfly spread...ie, just a credit spread...without owning the stock. For instance, today one could have entered a spread on IMNX by selling the September 70s and buying the September 75s for a net credit of $0.75. On 10 contracts that's $750 max gain or $4,250 max loss. Pretty decent numbers considering the stock was at about $61 this morning when these spread numbers were good and that there are only 7 more trading days until expiration. (I entered the trade a couple days ago with the Sep 65s and 70 for a spread of $1). The key here is to find stocks that have options trading a good distance out of the money and that obviously have decent spreads). EJA

To: ringo99 who wrote (203)	9/9/1998 11:35:00 PM
From: AurumRabosa	Respond to of 355

Roger, I don't think you missed a thing. Your example at $125 shows why the wings are flat lines. As to the $25 loss in the wings I'll check my calculations closer next time. I do see that I should include the commission for being exercised on the high side of a long call butterfly though which means N3 < N1.