Description
THIS OPTION SPREADS COURSE COVERS THREE (3) ADVANCED OPTIONS STRATEGIES – BACKSPREADS, DIAGONALS AND BUTTERFLY SPREADS
SECTION I – BACKSPREADS AND RATIO SPREADS
Back Spread and Ratio Spreads involve putting on an unbalanced amount of Long and Short Options. If we have more Long Options than Short, the position is called a Back Spread and if we have more Short Options than Long, the position is called a Ratio Spread. In a Ratio spread, you have unlimited losses on one side because you have more Short Options. The Back Spread can be constructed in many creative ways, and we show you how you can manage different strike prices as well as different ratios of Long and Short Options to construct an optimal Back Option Spreads. We don’t recommend Ratio spreads as they have an unlimited loss potential.
What you will master
What is the philosophy of Back spreads and Ratio spreads
Different creative possibilities with the Back spread
How should we look at the Greeks in a Back Spread
Importance of understanding the “Valley of death”
How should we avoid the valley of death
Why is this a Volatility strategy
Why do we not recommend a Ratio spread
Why is the back Spread a great trade for the busy professional
SECTION II – DIAGONALS AND DOUBLE DIAGONALS
The Diagonal is a variation of the Calendar time spread, and it tends to reduce the Vega exposure of a Calendar spread. Due to this fact, it also has a Delta bias when the trade is put on. It is important that you understand and become a master at trading Calendar spreads before you try a Diagonal spread. Although the Diagonal has very similar characteristics as a Calendar spread, the Diagonal is a complex variation of the Calendar spread. Just like in Calendars, the easiest adjustment to a Diagonal spread is to convert it into a Double Diagonal on the losing side, and the course covers this adjustment in detail. You will also benefit from a higher Theta decay than in regular Calendars, however the compromise you make is that the risk exposure in higher than a Calendar, and you also have a Delta bias.
What you will master
What are Diagonals and how do they differ from Calendars
Why are they difficult to adjust
What are the normal adjustments for a Diagonal
How the double diagonal increases your profit zone and your max profit area
Why does Diagonals have better Theta decay than Calendars
Why do Diagonals reduce the impact of Vega
Why is there a higher risk in Diagonals than Calendars
SECTION III – BUTTERFLY SPREADS
The Butterfly is a low risk, high reward, and low probability strategy. The Butterfly involves 3 different Options including Long and Short options, so it can be a bit difficult to manage once its put on. But the Butterfly can produce great results if it works, and in many cases the cost of the Butterfly is minimal, and if you’re lucky, you may even receive a credit for the Butterfly. Both these trades are generally put on by hardcore Options traders. The Butterfly trade should not be your regular “bread and butter” trade in the sense that you can’t rinse and repeat this strategy all the time for consistent monthly income. But the Butterfly can be an excellent strategy in very specific circumstances – like protecting the losing side of an Iron condor or a credit spread. Another great application for the Butterfly is during an earnings report. Both of these specific applications are covered in detail in this course of Advanced Options Strategies.
What you will master
Why is the Butterfly a low risk, high reward strategy
What is the probability of the Butterfly producing fantastic results
How do we adjust Butterflies
Why the Butterfly is a speculative strategy
Why is the Butterfly not a “bread and butter” trade
What are the specific instances where a Butterfly can work
When does the Butterfly generate its maximum profits
How can use Butterfly trades as a hedge to protect our monthly income strategies
Who this course is for:
Options traders with all the basic knowledge and want to expand their knowledge of more advanced strategies
Requirements
Options basics, Call and Puts and Vertical spreads
Options adjustments and Spread adjustments
Calendar spreads (for Diagonals)
Credit spreads (for Butterfly spreads)
Last Updated 12/2019
