rio up in us and london, page-40

re: rio up in us and london ... cloudstreet Hi Amory and Rembrant,
Thanks for the posts.

I am still trying to get my brain around the backspread concept. I read your posts on it a month or so ago, and I really like the concept of limiting downside risk.

From my limited understanding of the position you need the underlying to make a decisive move. If the move is well down down, you end up with the slight premium or loss with which you entered the trade. If the move is well up you are "nicely green". However if it doesnt move enough you are sure to make a loss - what I cant quantify is the size of that loss.

I think I need to set up a model - possibly getting to understand the ASX Hoadley options pricing spreadsheet would be a good start?

The range of options and strategies make the problem space huge. I would be grateful for any helpful strategy tips you can give me.