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

To: KFE who wrote (555)	2/16/1999 9:07:00 PM
From: NateC	Read Replies (2) \| Respond to of 2317

I'm going to throw one out...prior to Friday....for practice...and for you to have something to shoot at. KLAC closed today at 60 1/2. Let's do a covered combination as follows: Buy 1000 sh at 60.5 -com $8 -$60,508 Sell 10March 65 C at 2 3/4 by 3 -com $35 2,715 Sell 10March 55 P at 2 1/4 by 2 1/2 -com $35 2,215 Net -$55,578 At this point, I get nervous with the Put....so I'd buy a protective put, (converting the put positions into a credit spread) Buy 10March 45P @ 3/8 - com $35 -$410 Total cash outlay -$55,988 Stock bought basically at $56 as a result......worst case scenario is to lose the Put Spread of 10 points, but that's $10K You could decrease risk to 5 points/share ($5K) by buying the March 50 Put, instead of the 45.....that would cost $1.00/share