…. asks Richard P.
As always any number of ‘black swan’ -esque events could rattle the market, these events are unpredictable, and the horrific events in Japan are an example of how sensitive the market is right now, but also how resilient this current wave of bullishness remains. (more…)
For the out of the money calendar ratio, I’m about to explain an interesting concept. From our previous post, let’s say the stock is at $45 at expiration in the front month. If that is the case, the short calls expire worthless, and the long call for the second month is now the front month call. (more…)
As an alternative to the butterfly, a calendar spread gives you the ability to sell extra premium against a stock when it is used in combination, as we are doing. Like a butterfly, a calendar spread can be used as a bearish, bullish, or neutral trade. In our model, we will use it as a neutral trade and a bullish trade. We do like using it as a slightly bullish trade also. (more…)
One advantage of doing a directional debit spread over just buying a call or a put is that it takes away some of the premium risk. A disadvantage is that you also limit some of your potential profit. (more…)
An iron condor is a strategy is often one you could use when you believe the market will stay within a range. We could use a wide range and short-term trading, but once I explain the risk/reward, you will see how it may be justified in a longer-term section of the portfolio. (more…)
