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Strategies & Market Trends : Mr. Pink's Picks: selected event-driven value investments -- Ignore unavailable to you. Want to Upgrade?

To: F. Lynn who wrote (3531)	10/5/1998 2:38:00 PM
From: space cadet	Read Replies (1) \| Respond to of 18998

I have found the same problem as Cramer. You see, when you buy these options they are cheap. In fact, I believe that if they are under $2 then the maximum spread allowed is 1/4. If the option now goes up in price the spread widens substantially. I haven't dealt with thousands of options but even on 50 or 100 you are talking about thousands and thousands of dollars on the spread. Cramers method is very smart in my opinion. However there is a catch (wouldn't you know it?). The catch is that you need to have sufficient funds in your account to go long or short enough to cover your option position. For many small fry, including me, that's not easy to do. 100 calls of a 50 dollar stock is $500,000 or $250,000 on margin. But if you've got the dough then by all means Cramer's method is a good way to go.