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+344 Part Ill: Put Option Strategies 
+it of 9.30. Since the maximum value of the spread is l 0, one is giving away 70 cents, 
+quite a bit for just such a short time remaining. 
+However, suppose that one looks at the puts and finds these prices: 
+Put 
+January 80 put 
+January 70 put 
+Bid Price 
+0.20 
+none 
+Asked Price 
+0.40 
+0.10 
+One could "lock in" his call spread profits by buying the January 80 put for 40 cents. 
+Ignoring commissions for a moment, if he bought that put and then held it along with 
+the call spread until expiration, he would unwind the call spread for a 10 credit at 
+expiration. He paid 40 cents for the put, so his net credit to exit the spread would be 
+9.60 - considerably better than the 9.30 he could have gotten above for the call 
+spread alone. 
+This put strategy has one big advantage: If the underlying stock should sudden­
+ly collapse and tumble beneath 70 - admittedly, a remote possibility - large profits 
+could accrue. The purchase of the January 80 put has protected the bull spread's 
+profits at all prices. But below 70, the put starts to make extra money, and the spread­
+er could profit handsomely. Such a drop in price would only occur if some material­
+ly damaging news surfaced regarding X'iZ Company, but it does occasionally happen. 
+If one utilizes this strategy, he needs to carefully consider his commission costs 
+and the possibility of early assignment. For a professional trader, these are irrelevant, 
+and so the professional trader should endeavor to exit bull spreads in this manner 
+whenever it makes sense. However, if the public customer allows stock to be assigned 
+at 80 and exercises to buy stock at 70, he will have two stock commissions plus one 
+put option commission. That should be compared to the cost of two in-the-money 
+call option commissions to remove the call spread directly. Furthermore, if the pub­
+lic customer receives an early assignment notice on the short January 80 calls, he may 
+need to provide day-trade margin as he exercises his January 70 calls the next day. 
+Without going into as much detail, a bear spread's profits can be locked in via a 
+similar strategy. Suppose that one owns a January 60 put and has sold a January 50 
+put to create a bear spread. Later, with the stock at 45, the spreader wants to remove 
+the spread, but again finds that the markets for the in-the-money puts are so wide 
+that he cannot realize anywhere near the 10 points that the spread is theoretically 
+worth. He should then see what the January 50 call is selling for. If it is fractionally 
+priced, as it most likely will be if expiration is drawing nigh, then it can be purchased 
+to lock in the profits from the put spread. Again, commission costs should be con­
+sidered by the public customer before finalizing his strategy.