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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Lucky Joey who wrote (91226)	1/25/1999 4:14:00 PM
From: SecularBull	Read Replies (1) \| Respond to of 176387

Joey, you can close the spread anytime before expiration. It's called a bull spread, because the person that executes it expects that the stock will stay above the lower call strike (at the very least). In the perfect scenario, you'd close the position when the difference in cost for the two options acheived $10 (from $5 when bought this afternoon, to ~$6 currently). For that to happen, the price of the stock would have to move significantly higher than $185. If the stock drops below $175, you could still sell out of the position and probably remain relatively intact, assuming that you didn't wait all of the way until expiration to do so. The reason for this is the premium in each position. While the premium in the $175's would be reduced (thus hurting you), the premium in the $185s would be even further reduced (helping you since that lowers the cost of covering). You could also buy back the $185s on dips, leaving you with the $175 calls, outright. You would do that if you anticipated a quick return to higher levels after a dip. I have done this from time to time on certain stocks, and it works very well. Gotta go. Let me know if you have any other questions. LoD