Becoming an Option Seller Is Easy
It is exciting to hear that “90 percent of options expire worthless.” It gives you the feeling of being an insider and the hope of finding a magic bullet with which to win the so-called trading game. Only once you attempt it do the numbers not add up to the hype.Retreat, Recovery and Opportunity for Traders
The information throughout these articles has been broken down into basic and advanced strategies to highlight the differences between concepts that are solely designed to manage risk and ideas designed to also generate income. By themselves the basic and advanced concepts presented here are not inherently more difficult from one another. Nor are the basic and advanced strategies really required to be operated on their own.The Bull Call Spread and the Bear Put Spread
The third advanced technique that can be employed is the bull call spread and bear put spread. These are mirror images of each other. They are a sophisticated way of combining an at-the-money option and an out-of-the-money option.
The core benefit of trading a backspread ratio spread is the ability to use the market’s money to trade. There are few times when the market actually works on your behalf to help you succeed, but this is one of those times. Selling an option and buying two options provides a sincere opportunity to trade practically for free.Backwardation and Contango
Of all of the different types of spread trading this is the most straightforward. When it comes to the pricing of futures contracts the futures price is expected to be greater than the underlying asset. Earlier futures contracts are also less expensive than later futures contracts.