Calendar Spread Option Trading Strategies

October 7, 2011 by  
Filed under Option Trading

Horizontal spread is an option TRADING strategy which is created by simultaneously purchasing and writing two options on the same asset (stock) and strike price but different expiration you date. Horizontal strategy is most known ace Calendar spread because the options there are different expiration dates. Calendar spread, one of many different option spreads, is to neutral strategy.

You only make profit if the underlying price does not move to lot or only moves in a tight range. If the stock rises or drops to lot, you will not get profit because of the volatility. This is to not to not risk option strategy, but it does have low risk. There is not such thing as no risk option strategy. Calendar spread options strategy makes profit from the difference of option premium decay or the difference of implied volatility. Options which is near month expires will lose its value very fast. On to other hand, option which is farther month from expiring will lose its value  slowly. Traders will implement to calendar spread by buying option which is  farther out and selling a near month.

After some time they will review the position by buying the option they previously sell and selling the option they previously buy. This is also called spread TRADING. Investors can buy call options or buy put options with this strategy. But I  prefer using put options because it is cheaper.  I will give you an example. Share of a stock XYZ are trading at $50 . To create a calendar spread, you want to buy September $50 call and sell August $50 call. The September call will COST you $6 and August call will give you $4. The $2 spread is the total cost of  the strategy. For this strategy to work, you will want August call to lose its VALUE to faster than September call.

In July the options might look like this. August call will worth $1 and September call will worth $4. Your spread will will increase to $3. You profit will sees the spread difference which is $1. In order to work the underlying stock price must remain stable. Any drop or rise will affect the Time VALUE and option price. Calendar spread  sees used to make monthly income and that’ s why it is called income strategy. You don’ t need the stock to move to be successful.

For best candidate this strategy looks for channeling or sideways stocks. Those stocks tend to move in a small range. Here are some tips when choosing the stock: Don’ t choose volatile industry like technology or commodity companies. Don’ t have earning release in the coming months. For the news or the their website for possible take to over or mergers.

Discovering the exact option for TRADING strategies to business is not difficult by getting the exact dates and ready to take the risk. You dog also visit this site http://bestoptionstrategy. com/calendar-spread/for dwells info.

Please help in answering this investment problem?

September 19, 2011 by  
Filed under Articles, Option Trading

The common stock of the C. A. L. L. Corporation has been trading in a narrow range around $50 per share for months, and you believe it is going to stay in that range for the next three months. The price of a three-month put option with an exercise price of $50 is $4, and a call with the same expiration date and exercise price sells for $7.

•a. What would be a simple options strategy using a put and a call to exploit your conviction about the stock price’s future movement

•b. What is the most money you can make on this position? How far can the stock price move in either direction before you lose money?

•c. How can you create a position involving a put, a call, and riskless lending that would have the same payoff structure as the stock at expiration? The stock will pay no dividends in the next three months. What is the net cost of establishing that position now?

Cheap Option Trades – A Powerful Binary Option Trading Strategy

October 28, 2010 by  
Filed under Option Trading

Cheap Option Trades? NOptions binaries are an f? Easy and popular to trade in markets without the complexities of regular operations. Adem? S, you do not need tens of thousands of d? Dollars to start. You can get yields of 60% to 500% in less than an hour! We focus on simple, fixed binary payment options offered by intermediaries such as anyoption, StartBrokers, Binarix others. Anyoption will use in our example, because they have the best payouts of any fixed payment agent binary options we found. You can trade shares? Indices and commodities with binary options, but we will concentrate on the forex market due to the availability of free packages gr? An Ficosa and tools? Lysis t? Technician for currency traders. In an operation is? n est? fixed payment standard binary options, a profitable trade pays between 60-70%, while a p? loss to? result in a return of 15% of your investment? n. This corresponds to a p? Total loss of 85% of your investment? N. A potential gain of 60-70% in comparison? N a p? Potential loss of 85% does not put the odds in your favor.Sin But I will share with you a hedging strategy that creates a powerful “area profit “, with a positive expectation in general. When making a Put (sell) over an extraordinary choice to call (buy) option? No, it’s almost guaranteed that at least one trade be? profitable. Given our expectation of negative returns, a victory simult? Line of p? Losses and translate? a p? loss of 15%, while a win to give? resulted in a gain of 60-70%! Cheap Option Trades? NA potential increase of 70% compared to p? Potential loss of 15% is much better than a p? Potential loss of 85%! Here? est? An example of c? mo can do this. Say we are placing a extraordinary choice of buying in an uptrend. While the upward trend contin? To, we will realize a gain at the time of vencimiento.Pero so if the trend reverses? This is the perfect opportunity to put our trading profit zone. Simply place an extraordinary choice to buy the address? N of the investment? N of the trend. While the price of maturity est? above our strike price call option? n, but below our strike price Put option? No, we will receive a profit of 60-70% of our INVESTMENT? n.Si finished one of the shops outside money, we’ll see a p? loss of 15%, assuming that both operations are the same size o. With these capabilities, s? We need to win 25% of our brands to make a profit. Without this strategy, you kind of get to make m? S half of our marcas.Esta installation? N not going to happen all the time, but always and as always trade in a strong trend, and keep abreast of potential investments, duty? to see an overall benefit of foreign exchange options trading binary. Cheap Option Trades? N ??????????

Always dream of being rich? Never able to make a steady profit through? S trade? Get your Trades extraordinary choice and have cheap? Success forever! Try this program trading and financial Slackers are free in 6 months!

Next Page »