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

To: Jon Tara who wrote (734)	6/3/1999 1:03:00 PM
From: KFE	Read Replies (3) \| Respond to of 2317

Jon, 1. Not in the spreads we are discussing. Both the short and long side are OTM, usually deep OTM,with a short time until expiration. I will either cover or leg out(if I feel confident in the direction of the market) once the spread reaches my expiration breakeven point. Early exercise of OEX options are usually not a problem anyway(premiums remain high right up to expiration). 2. Less commissions on call spreads- if you are right then there are only two commissions involved. On a Put spread there would be four commissions involved. 3. Margin- equity required is the same but balance available to gain interest is greater on call spread. 4. I don't think that this applies to the spreads being discussed since the time to expiration is so short. 5. I always check the equivalent put spread before entering trade and inevitably the call spread has the better risk/reward ratio. I have a copy of McMillan and have read it. I would recommend it to anyone wishing to learn about options. He is not God though and I think the sections you refer to do not apply to the types of spreads being discussed. Some of us actually traded options before McMillan and the other Guru types existed. The beauty of doing OTM OEX spreads is that you make money if the market goes down, is flat, or goes up slightly and if you are correct about the direction there are no commissions going out. Allows you to hedge or play the downside without shorting or the risk of nakeds. Any fault in the logic and I am willing to discuss it. Good Trading Ken