es one of the big keys is being near the floor or ceiling
You do not have to be lucky to get an entry near the floor or ceiling as new spreads are appearing throughout the day
Yes on one spread 1300.0-1360.0 if entery at 1301.0 then that would be 10 ticks each tick equal $1
1301.0 buy spread price
1300.0 floor
1.0
remove decimal
10 ticks
x1 dollar per tick
$10 risk
if you bought at 1301.0 and sold at 1300.9 then loss would be $1.00 as the loss would be 1 tick
risk = margin - there is no debt as the risk is fully collateralized up front and this is the margin (margin is the money you have to put up - up front to place the trade). So if you open the trade at 1301.0 would would have a margin debit of $10 from your account immediately upon placing the trade. If you closed the trade at 1300.9 then you would get a credit of $9 to your account $10 debited ($1.00 loss) = $9 credit.
You can buy if the price is below the floor. It will not be free of course as there is still time to expiration so you will have extrinsic value. If you are buying a spread below the floor or selling a spread above the ceiling this would be an OTM option and show as O under the TM column on the scanner.
if you bought the same spread at 1310 risk would be $100
1310.0 buy spread price
1300.0 floor
10.0
remove decimal
100 ticks
x1 dollar per tick
$100 risk
Where you exit the trade or where it settles and the difference will be your P/L (with the maximum P/L being capped by the strike of the floor or ceiling if just doing a spread and not a hedge)
Darrell
