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Mindspring wrote:
<blockquote TYPE=CITE> <font color="#000000"><font size=-1>Hello,</font></font>
<font color="#000000"><font size=-1>I am entertaining the idea of using
Bull/Bear Spreads to trade S&P 500 futures options. It's been
about a decade since I last investigated options spreads (stocks only -
not futures) and have a few questions. I contacted my futures broker
and it was quite obvious he was not totally up to speed on the topic himself.
The conversation went something like this ...</font></font> <font color="#000000"><font size=-1>Me
- I'm thinking about employing Bull/Bear Spread futures options to daytrade
the S&P 500 market. Let's take for instance a hypothetical bull
spread - buying the lower strike price call option and selling the higher
strike call option. What is my margin requirement for such an animal?Broker-
There is no margin requirement, you just pay the net premium for the spread.</font></font>
<br><font color="#FF0000"><font size=-1>This is correct.</font></font>
<br> <font size=-1><font color="#000000">Me - But what if the short
call is in-the-money and is exercised against me?</font>Broker - You don't
have to worry about that.<font color="#FF0000"> You now have a bear spread.
Long the call and short the future. You don't have to worry.
The risk is just the premium between the strike and the option value.
If they exercised the short on the bull spread and it was deep in the money,
the long one was deeper in the money and was probably trading near intrinsic
value.</font>Me - You mean no one ever exercises S&P 500 futures options?Broker
- You don't have to worry about that.Me - But let's say someone did exercise
my short in-the-money call option. I don't understand why I wouldn't
be required to have the funds (margin) to purchase a S&P 500 futures
contract and deliver it to the call buyer. <font color="#FF0000">
Futures are created. unlike stock which has to be borrowed. The books
just say you are short and he is long and the option disappears.</font>Broker
- You would be covered by your long call position. etc, etc,</font> <font size=-1>With
each question, my broker placed me on hold and asked my questions to someone
else and then reported their input back to me. Could someone who
is well versed in this area please provide me will real answers to my questions
posed. Thanks, Brian</font>
<p><font color="#FF0000"><font size=-1>Call the exchange and ask them for
the informational brochures and margin requirements. This is all
provided free. When I was trading, 98% of the brokers didn't understand
options. I hope that has improved today, but I doubt it has by very
much. No matter what they call themselves, they are salesmen.
Would you ever ask a sales person to fix anything you purchased or understand
how it really works. Ira.</font></font></blockquote>
<p>Mindspring wrote:
<blockquote TYPE=CITE> </blockquote>
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</x-html>From ???@??? Mon Feb 14 16:50:48 2000
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Date: Mon, 14 Feb 2000 16:23:03 -0800
From: Ira Tunik <ist@xxxxxx>
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Subject: [RT] Re: GEN: Barron's story " King of Naples"
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Status:
YOu would need an investment attorney. Ira.
Joe Frabosilio wrote:
> While coming back from New Orleans over the weekend. I knew Barron's
> would have a story about the Bermuda-based hedge fund, Manhattan
> Investments. What I didn't know was that Dr. Van K Tharp was somewhat
> involved with David Mobley.
>
> Page 29
> " Mobley himself has become a fixture at trading seminars put on by
> North Carolina psychologist Van K. Tharp, who has made a career of
> counseling both professional and amateur traders in behavioral
> self-control. Money really started cascading into Maricopa after June
> 1997, when Tharp touted Mobley's performance record and called him the
> most successful graduate of Tharp's two-year Super Trader Program.
> Mobley's investment record was even touted by Tharp in a Forbes magazine
> profile of the psychologist. "
>
> "Tharp recently told Barron's in a telephone interview that he thinks so
> highly of Mobley that he has put the bulk of his personal wealth into
> Maricopa. Tharp's Website, called the International Institute of
> Trading Mastery, describes Mobley as a "fantastic trader and
> businessman" and a "wonderful human being." "
>
> "Manhattan Investment Fund had defrauded investors out of $300 million
> by phonying up the trade and account information sent to its independent
> auditors to cover up"monumental" trading losses. "
>
> At first I thought Dr. Van K. Tharp was in on the scam and receiving
> kickbacks. But after thinking out it, I think that Dr. Tharp just got
> caught up in the wrap.
>
> Anyone close to Dr. Van Tharp? Did he come out with a statement about
> David Mobley?
>
> What could an investor do, if he/she invested in an offshore hedge fund
> and found it to be like Manhattan Investment Fund? Are there any legal
> grounds?
>
> Thanks,
> Joe Frabosilio
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