Lee---
I have traded options for years on Scottrade, however, am going to switch to Think or Swim. I have some questions. My option trading has been buying calls and puts so obviously I either win big or lose big. When you enter a vertical spread (to reduce risk) how does that operate?
For eg Lets say I have $1000 in the account
lets say I buy 1 in the money call and sell one out of the money:
in the money= $3
out of the money= $1
Question # 1: Is this a leg?
Question # 2: What is the commission on this? For straight buys and sells of contracts Scottrade is very high.
Question # 3: The net is $200. Is the leg executed together?
Lets assume in 2 weeks the stock goes up so the out of the money is now in the money. In the leg do I set two stops or does a leg execute automatically when the out of the money becomes in the money? Am I required to set two separate stops and each is executed separately or are two stops set and the leg execute all at once? Do you have to have margin (or cash in accout) in case the stock runs like crazy and you are at loss if there is no stop? I know this is alot but would appreciate your input. Thanks, Tubber
“The difficulty lies not so much in developing new ideas as in escaping from old ones.”
John Maynard Keynes
