Using Vertical Options to Profit in Sideways Markets
Article Abstract:
There are three types of option spreads: vertical, horizontal and diagonal. The difference in the three is the mix of a purchase and sale of a put and call on the same option, but with different expiration dates or strike prices. A vertical spread is when puts and calls are both purchased and sold on an option with the same expiration date but different strike prices. The spread between purchasing and selling, and the difference in strike prices, depends on whether there are bullish or bearish market conditions. If an investment is going to be made in an options spread the following things should be considered carefully; define year risk, make time work for you, know when to cut losses or let a profit run, and consider how much commission will have to be paid to execute the spread.
Publication Name: Futures: Magazine of Commodities & Options
Subject: Business, general
ISSN:
Year: 1984
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Why You Should Hedge Currencies with Options
Article Abstract:
Currency options are a good way for companies doing international business to protect themselves against foreign currency swings. Currency options are handled like stock options. Calls and puts are used. These are the right to buy a currency against another currency and the right to sell it, respectively. An advantage of the option contract is that the holder can determine when in the future the option will settle, any time prior to the expiration of the contract. Currency options provide the trader with insurance-like qualities against the volatile foreign exchange markets.
Publication Name: Futures: Magazine of Commodities & Options
Subject: Business, general
ISSN:
Year: 1984
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Using Options in Volatile Times
Article Abstract:
Volatility spreads in T-bond options at the Chicago Board of Trade can be useful if the market moves in any direction. An ordinary sort of volatility is analyzed, wherein the delta, or hedge ratio is about half and the net position is neutral. Major risk in volatility spreading exists when the market is steady. The delta cannot function without enough movement. Money supply data, and international events can be useful in determining a volatility strategy. A graph of volatility spread profits and losses is included.
Publication Name: Futures: Magazine of Commodities & Options
Subject: Business, general
ISSN:
Year: 1984
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