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

To: Jon Tara who wrote (741)	6/4/1999 6:50:00 AM
From: dealmakr	Read Replies (1) \| Respond to of 2317

Jon, One of the goals in writing a vertical call credit spread is to limit your risk as much as possible. With the OEX @ 657.66 any rally in the market can subject you to a theoretical loss of more than 5 if your short option is exercised on a rally and the market then reverses intraday without being able to adjust your hedge. It doesn't happen often, but its possible. Your return of a net credit of 5 is great, but with the OEX ranging 10 points a day your risk is also great. Reducing exposure to loss while trying to capture some premium return, is the better strategy IMHO. Good Trading Dave