Trading option backspreads

Format:

Book

Author/Creator:

Warner, Adam, Author.

Series:

Insights for the agile investor

Language:

English

Physical Description:

1 online resource (1 v.) : ill.

Edition:

1st edition

Place of Publication:

[Place of publication not identified] FT Press 2011

Language Note:

English

System Details:

text file

Summary:

A backspread is an option spread in which a trader carries a short position in one option series and a greater quantity of long position in another option series. The backspread gives you a two-pronged bet. Since you typically structure them to yield a credit, you win small if the entire trade goes worthless. You also have extra long puts on a put backspread, and extra long calls on a call backspread, so you potentially win big if the underlying stock moves sharply beyond your strike prices. That sounds fantastic, like getting paid to buy a lottery ticket. Alas, you face risks, too. You lose if the underlying stock hovers near the strike price you own or if implied volatility of the options declines while the stock moves into unfavorable territory. Even so, backspreads provide excellent risk/reward characteristics if you want to bet on a move in the underlying stock. In this Investing Short, Adam Warner shows you how.

Notes:

Bibliographic Level Mode of Issuance: Monograph

ISBN:

9780132842617

0132842610

OCLC:

761697275