Paul:
Did you read any of the replies to your original post on this? If not, I suggest you read them, if you have read them and still think you are correct and the rest of us are wrong, I humbly suggest you do not trade any real money until you have paper traded for a while and actually see what the equity in your account will look like after a trade such as this.
Better yet, get yourself a copy of McMillan’s book, Options as a Strategic Investment and read it. He does an excellent job of explaining the various P&L possibilities of various option strategies.
I don’t mean to sound harsh, but you do not seem to understand how options work, and do not want to see you throw money down the drain finding out how they work the hard way.
Here is an analysis again to your original post. Please let us all know what you do not understand or disagree with.
Ken
With the stock at $64 at expiration ;
Short 40 put expires worthless [no gain or loss at expiration]
Long 30 put expires worthless [no gain or loss at expiration]
Short 50 call now worth -14 [you lose $14 dollars on this option at expiration]
Long 60 call now worth +4 [you profit $4 dollars on this option at expiration]
You lose a total of 10 points at expiration on these 4 contracts, then add back in the 2 point credit you received when you first put the trade on and you have a net loss of $800 on the transaction as a whole.
From: OptionClub@yahoogro
Sent: Friday, June 11, 2010 10:46 AM
To: OptionClub@yahoogro
Subject: [TheOptionClub.
long call; short call; long put; short put
I thought it was 2 spreads; call(short & long) and put(short and long)
using a genaric(any) stock or index. Example;
1 contract
short 50 call+ long 60 call (spread) credit 1
short 40 put+ long 30 put (spread) credit 1
when I open the position, I earn $200
options expire 64 so puts expire worthless, so I keep $100
calls in the money so I lose $100
when all is said and done; I earn $100
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