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Strategies & Market Trends : Option Spreads, Credit my Debit -- Ignore unavailable to you. Want to Upgrade?

To: KFE who wrote (530)	2/14/1999 3:02:00 PM
From: jjs_ynot	Respond to of 2317

>>> One of my favorite strategies was to do OTM credit spreads with 3-6 weeks remaining and cover if it became in the money. Any thoughts on current applicability. <<< You can't beat a classic. A market order on an equity option is like permission to rob you blind. I tried an experiment on XCIT and sold a put at merket. The MMs blipped the bid down from 1 3/4 to 3/4. You basically have to deal in very liquid options like CSCO, MSFT, etc. to get a fair execution.

To: KFE who wrote (530)	2/14/1999 4:32:00 PM
From: jjs_ynot	Respond to of 2317

>>> Are you getting paid interest on credit balances derived from credit spreads? <<< I am not aware of any brokerage that I do or have done business with that gives credit for margin/credit in use. Anything above and beyond the say $5. between the strikes will earn interest.

To: KFE who wrote (530)	2/14/1999 4:39:00 PM
From: jjs_ynot	Read Replies (1) \| Respond to of 2317

>>> Is it still possible to do a butterfly for a net credit (without legging a side)? <<< I would guess that would depend on the price of the underlying, the difference between the strike prices of the sides of the spread and the implied volatility of the underlying. Have you tried one recently?

To: KFE who wrote (530)	2/14/1999 10:58:00 PM
From: dealmakr	Read Replies (2) \| Respond to of 2317

Ken, Welcome aboard, as a former ROP we will all be asking you a lot of questions now, see what you got yourself into<G>. Only kidding, but your experience is welcome. Interest on credit balances from spreads; To be honest I don't know if I am getting this or not. I don't beleive so. Orders placed at bid or asked; On liquid options not too much of a problem, had an experience this week on trying to open a LEAP call position and they didn't fill and ticked the ask up. If entered next week will call broker instead of using web and get firm quote, time and sales, bid and ask etc. In the past broker has called the floor when problems occured in filling an order or representing an improved quote and problems have been resolved ok with me on the phone. Market orders; Never use them in trading options as a matter of course. Sitting on a spiked fence is an excellent analogy. I think of market orders as a great way for someone to pick your pocket. If the market is liquid OEX,DELL,IBM etc, you can usualy improve the inside and get a fill especially on at the money strikes where the spread can be 1/4-1/2 at times by becoming the MM. Someone from the floor will fade you on most cases if the market doesn't run away to one side or the other. Butterflies; I don't use them, but am aware of the potential power OTM credit spreads; My timelines are currently running 1-2 weeks prior to expiration. It is a senario that works for me as I am trying my best to reduce exposure to as little time as possible. I will take a lot less premium for a better opportunity at a safe trade without being exercised. With recent market volatility moving the OEX 10-20 points intraday and others such as the techs, the holding period whereby you can take a great percentage out of the spread trade can be as little as a day. Running TA scans each night on target stocks or indexes for support and resistance levels short and long term has also helped me judge possible movement. An interesting sidenote that was in Barons this weekend said that the NYSE will be lifting the 50 point index arbitrage limit effective Tuesday to 2% of the Dow. Now you don't think that anyone will take advantage of this new opportunity to increase volatility, do you? Good Trading Dave