The following is the OptionBT sighting of
"One Foot in One Foot Out".
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"One Foot in One Foot Out"
Position taken   :     April 11,2001
Position Description   :
One Year out,
75 point vertical bull put spread for credit,
the short side was in the money by 35 points.
March 2002 / Settlement = 1158.60
Credit or (Debit)   :
Comments   :   "One Foot In One Foot Out"
One of the major advantages of positions that have a year until expiration
is that even if something really bad happens (in this case the events of 9/11) there
is still a chance to recover for a profit.
"OFI" was pretty sure the market could
manage an upswing if you were to give it a whole year. He would have been right of
course had 9/11 not happened and revealed how weak the support for a rise really was.
Of course we cannot know exactly what did happen, but if "OFI"
was lucky enough to hold until expiration,
even with 9/11, this BigFoot still made some money ($1.3M that is).
Not the $5.5M that he received when he put on the position and what he originally
had in mind as the net outcome, but all things considered "OFI" demonstrates the
robustness of year out positions.
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