Forum » General » I want to double check my option spread sell is accurate

I want to double check my option spread sell is accurate

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Posted by DR MCGILL on January 10, 2012 (11:57AM)

Let me present the situation.

Say someone bought 10 aapl 400 jan 21 calls and sold 10 410 jan 21 calls a while back when the stock was under 400. 

Now, someone wants to close the position.  Does one use a debit, or credit order for this (sell to close 10 aapl 400 jan 21 call and buy to close 10 410 jan 21 calls)?

Also, when would someone use an even order?

Thanks.

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Posted by Rob M on January 10, 2012 (12:06PM)


That would be a credit. It would be a debit if you bought the 410 originally and were short the 400.
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Posted by DR MCGILL on January 10, 2012 (05:31PM)

ok so for this trade right now:

the aapl 400 call is at 24.00 and the 410 is at 15.00

So if you wanted to lock in the 900$ for the spread you would put in
sell to close the 400 and buy to close the 410 for a 9.00 credit order?

thanks
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Posted by NYSEguy on January 10, 2012 (06:30PM)


DR MCGILL said: ok so for this trade right now:

the aapl 400 call is at 24.00 and the 410 is at 15.00

So if you wanted to lock in the 900$ for the spread you would put in
sell to close the 400 and buy to close the 410 for a 9.00 credit order?

 
That's right.  Keep in mind that you can often do better than selling at the "bid" and buying at the "ask".

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Posted by doougle on January 11, 2012 (08:45AM)

Doc, an "Even" order is normally used when rolling an option out (and up) to a later expiration.
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Posted by OldFart on January 11, 2012 (12:05PM)

NYSEguy said:

DR MCGILL said: ok so for this trade right now:

the aapl 400 call is at 24.00 and the 410 is at 15.00

So if you wanted to lock in the 900$ for the spread you would put in
sell to close the 400 and buy to close the 410 for a 9.00 credit order?

 
That's right.  Keep in mind that you can often do better than selling at the "bid" and buying at the "ask".

 usually i go to the options view tab, right click on the blue arrow, trade and the system will calculate bid/ask spread and the middle for your spread. it is your decision where to put the order

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