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.

The San Jose Options Course

March 20, 2011 by  
Filed under Option Trading


www.sjoptions.com San Jose Options is the premier options course for learning low risk option trading strategies. We’ve taken a new path, and if you want to learn something different and produce different results in your option trading, then we invite you to join us. One of our focuses is on Broken Wing Butterflies and Unbalanced Condors. Although rarely taught, we’ve grown very fond of these trades and we are experts on them. Visit us online or call us for a live demo.

Consistent Monthly Cash Flow Using The Iron Condor Option Trading Strategy

July 7, 2010 by  
Filed under Option Trading

Iron Condor Spread is the combination of a Bullish Vertical Credit Spread and a vertical downward Credit Spread on the same underlying asset. Depending on how the construction spreads, option traders potentially may obtain twice the collect premium over a single extension position. Since there are bullish and bearish spreads involved in the Iron Condor option trading strategy, there is a break and upper break even lower return. The benefit is realized when the underlying asset remains above the break lower profitability or below the tensile yield. In other words, if the asset price is above your bullish short strike and below the bearish short strike, the option trader the benefit of both spreads through the decomposition of the time. This strategy can be used regularly once a month to consistently generate a healthy cash flow in its trading business. Time decay undermines the value of option prices. There is no option traders who understand many of the benefit is extended to trade, as it simply looks complicated. Well, it is not. Iron Condor Spreads is a market neutral strategy that has positive time decay and negative gamma with limited risk. Traders with any level of option trading experience can use this method of negotiation. Depending on your brokerage experience and software, these spreads should be available electronically with a single click functionality. Some brokers may even provide better leverage to trade Iron Condor with them. The Bulletin IronCondorSpread was designed to identify low-risk option trading opportunity when the index is kept in a narrow trading range during the current cycle expires. holding period is always no more than 60 days. In trading, the only goal is winning money. As a merchant, you should not in large profits or excitement. Built properly, iron condor spread can be a consistent revenue generator. Before entering new positions, you should seek the positions that have a high percentage of profitability. If you have the odds in your favor. is likely to be profitable in the long term. To do this, look specifically for options that have a relatively high level of volatility. This means to find positions that are more expensive. Establishing a market position that you believe the underlying asset will not be installed anywhere in your new short-term strike. To achieve consistent profit, our Iron Condor positions will always have a wide range of benefits on the underlying asset. So, if the underlying moves up, down or sideways, even always benefit from time decay. Having a large range of benefits is important because it is almost certain that we will ensure that the benefits provided and does not require us to spend much time to monitor our open positions. We like the idea of trading with little stress and with little work. Our usual profit target for each Iron Condor spread is 13% to 18%. Profit is usually realized within 60 days. Iron Condor trading is an effective negotiation strategy, as it is a limited risk approach. You never lose more than you have allocated for each trade. Although it comes with a high probability of winning, losses can be kept low when the trade moves against him. As strange as it may be losing months for us, keeping losses low is the key to any successful trading strategy. While making money is important, capital preservation is equally or more important. IronCondorSpread Bulletin, http://www. ironcondorspread. com is the first Web site in Credit Spread and Iron Condor Spread Option Trading Strategy.

Mike Conley is the chief editor of the popular trade option Newsletter, the newsletter IronCondorSpread. The Bulletin is the newsletter IronCondorSpread primary credit to Spread and Iron Condor Option Trading Strategy. Our trade recommendations have always generated $ 3,000 to $ 5,000 for each month of trade for the benefit bullish, bearish and sideways market. For more information, please visit www. ironcondorspread. com