Quote from Wilt:
I'm watching Options Action on CNBC. I see a call spread on FDX. They're talking about buying an APR 95 call for 5.4 and selling the 105 put @ 1.9. This takes the trade cost to 3.5, thus profitable at 98.5 versus 100.4. He also sells an 85 P for 3.15, taking the cost down to .35. So it seems if it hits 98.5, he's up 10x. It can't be that easy. What do you have to do to "put back" the options you sold?
I trade directionally long naked calls or puts. I don't want to hold until expiration, I only want to be in the stock until my desired percentage gain in my option is achieved. If I could reduce the stock price where I'm profitable as greatly as the above trade does, I would exponentially increase my profits. What am I missing? What responsibilities are there similiar to buying to cover for selling these options that I don't own and exiting all before expiration?
Thanks,
Wilt
