Introduction to Options Trading Strategy

1 Pages·0.439 MB·English

by  Heidkamp D.

KEY OPTIONS STRATEGIES – AND WHEN TO USE THEM
www.futuresmag.com LONG CALL CLASS:Directional SHORT BUTTERFLY CLASS:Precision CALL RATIO SPREAD CLASS:Precision
SPONSORED BY: Peavottleurtnion: Decay with time WmoHreE Nou Tt-Oo fU-thSeE-:mVoenrye yb u(hlliigshhe.Tr)h teh me oorpet ibounl ltiosh b,uthy.e Peavottleurtnion: WA oHrE aNb oTvOe CU SaEnd: Wpohseinti othne i sm oavrekrept riisc eedit hweirt hb aelow Peavottleurtnion: WneHarE AN a TnOd uUsSeEr :eUxpsueactllsy a e snltiegrhetd r iwseh einn mmaarrkkeett bisut
+0 PLOROSSF:ITL:imInictreeda stoes a ams omunartk peati dri sfeosr. option. + ADecay with timeC mliemfomtn titnihle eonxrtp smiorao ltveieoft ni.n,O aern iwtdh hmeera ndr koirenetlc yti siao n nfee iawsr eBwx,peaeenckdtse aadnr.e +Decay with timeB sPaetR eeOsx FapI iTpr:aotMtieoannxt.iimalu fmor p sreolfl-ito frfe.alized if market is at B
www.iseoptions.com - A DaeasxsEs pvCeiortAa.laYAtitos iCl nittHi ymv AadelReu pcAear.eCsIafsT esvEesoR,sl,vIaSeatTrilluoIitCesyi So oi:nnf P cpsorpoesesaitiestioeidosnsn, ui esepr roa.os dwioeanss ttsiolnowgwasr;d 0- B PsLeDpxORErpOSCeiraSAFad:IYtT iMi :osCn aMpH.xuaiAmxt RioumAnmu.C mlTo EspsRr oIoSfciTtc IuiCsrS sc :irfeD dmeitac arfkoyer t nw ieshg iacltihg Bib alte 0- A Decay with time LmDpraOrEapoSrCifkdiSAtels:yYt Lf wrriCimosiHtmeihtsA e.opRdpa AsotisCnoa TngdE eodR weoIcSnfa TstyiiId mCaeSec c.:b eAuIfltte mAroa,pattreehkn ete-hter eeni sdim sea odtt hs Bitef,
SHORT CALL CLASS:Directional until final month, during which distinctive greatest loss accrual by decay of long option.
Pattern WHEN TO USE:Firmly believe market is not pattern of butterfly forms.
evolution: A gcseaollilln sa git f-u tspho.emS-meelwol nhotauhtt -ccoaofln-ltsvh iienf -cvmeedor ynm ecayo rn(khfeiidtg ehisnentr’ tms tgaroirkiknee)gt up; PeavottleurtnioLn:ONG CONDOR CWLHAESNS: TPOre cUisSioEn:Enter in far-out months,if desired. PeavottPleurtnUionT: RATIO SPREAD CWneLHaArES BNS :a TnPOdre icUsi sSeiEoxpn:eUcstueadl ltyo e fnatlel rselidg hwthlye nb umt ahrakse ta is
+0- wPLORilOlS sSFt:IaTIg:nncLarimeteai tsoeerds fataosll .mpraermkeiutm ri sreesc.eived. +0 B C PbLOeRtOSwSFe:IeTMn: MaBx aiamxnidumm uC m lao tsp esr xoopfciitcr uaretrisao linifz .meda rifk emta irsk beet liosw A or + A Dectaimy ewith pPatoR teOexnFptIiTira:altM ifooanrx .ismhaurmp prirsoef.it realized if market is at A
Decay with time aDsEsCetA.YA sC tHimAeR pAaCsTseEsR,IvSaTluICeS o:fP poosistiitoionn i si nac rgeraosweisng - A D aDbEoCvAeY D C aHt AexRpAirCatTiEoRn.ISTICS:Decay negligible 0 LmOarSkSe:t Lfiamllist.ed on upside but open-ended if
as option loses its time value. Decay with time utenrtfilly f"i nCaol nmdoonr tdhe, vdeuloripnsg i tws hchicahr athctee r"issutipce srh baupte-. - Decay with B DprEoCfiAtsY f rCoHmA oRpAtiConT EdReIcSaTyI CacSc:eIlfe mraaterk tehte i sm aots At ,
www.schwab.com LONG PUT CLASS:Directional SHORT CONDOR CLASS:Precision time rapidly with passage of time.At B,you have greatest
LOoPnTIgO NCa TlYlPE MBABIRuAKlSlET POPOTREpONeFTnIITAL POLiTLmEONiStTSeIdAL EDHFEuFCErACtsYT Peavottleu+0-rtnion: Decay with time WmPLDasOREosHOCSereEtSAF. N:oIYATLu s :TiCt mIt-OnHoimict fArU-eeetdRh Sap AeEstao-e:Csm s VsTa eoaemEsnsrR,y oemvI uySba naTel(urtlaIok Ceprwe iSaoste:hi fdfr P.ap) To flotlohsshsire.tei t io omioopnpont iti roseieo nr aonb. dewtaeoasr si bsttuihony,wg.tahred Peavottleurt+0nion: DAecay with timeD WwCoPbue,RiHtlbtOohsuEiw FdtlNeI eTtAs h Tso :eo OftrMr het aahU aibnaxsS otiaomE vr n:aegueNn moD gomo erpdaom.r tnpo aetoflhxilttyp e t winoerta nigilttali oeloo ,rfnceiocs.dru b rwse tihtrfwo emnnega em rnmka eBortk v aeiesntd, CPeavAottleuLrtnioLn :RATIO BACKSPREADrateCWkaP ecoRLttHfAOi vilESsFoiNt SIsnyTs: e:T wPaaLOrrciite mc hBcUr i uitgsaSaeirnEolde dn:ba oNytsneh od rord ewmpocrwsaao ylsbnl yiaosg ibfend inlseloi t toenbyfrgu et itondo o c puwrptepiehoasnenis dni.bne umg.ta r-
SLohnogrt PCuatll BBeeaarr LiOmpietend LiOmpietend HHeulrptss Pattern SHORTA PUT eaCxsL pAviorSalaStit:oilnDit yivr aedlceutceiro.eInafa svleosl,aetriloitsyio inn csrpeeaesedss, uepro.sion slows; - B C upLeDOxnaEpttSCitirlSeAa l:rtaYniMos tneaC mxmHainmeoAdrung,RmtaeAht s, lC.todhTsuasEt rw RitniiImlgSl eTow,cICmchuiSacr:r hikfD e dpeti ocsissta iibytni eocntntwei vigesel eih gnCe iolBbdn l aetdonodr C. +0- A Dectaimy ewith oLBaplOpr eaoenStfn itSet- :elxponpMonditgraeea xdsntiit mtoirinaanu dl.mr daTo hllnlleoiy ,stsi nhtslhoge ies sdm s tr oriaesawra dklnleieeszs-tieosd.d fet fh.i ffa omnr afsorakrc eretiqf iiucsi ivna-tg
SBBLohuenoallgrr St S BpPpururetetataeddrfly MBBBieuuxaellllrd LLLLiiiimmmmiiiitttteeeedddd LLLiiiOmmmpiiiettteeenddd MMMHeiiixxxlpeeeddds evoluti+0o-n: Decay wAith time aaWdcPLDossOoREs nHwOoSCevEpntSAiF.nNt.:IYiAcTSoI e :snTen Cd clLOt lH rli imomeom AUsauaieestRStr e-sekpEAo dseia:f Ct t-asFts tTsois ihsrte E emimpsnmR-,rolmaIyeevStr moa kbTvgnleeiuaIoueCtlleii ymunSef eoagvp: .rlfe uPle ds ptocmo.sose waiisitfvrin itkeos.ieoodntmn fii sresio n wanmc horg eatsr atoag slwoeei.isnngg Peavottleur+0tLnioOn:NGD eScaTy wRiAth DtimDeLE CWbmsPLiOuRLgaHtAOnSr knaESSFeolNS:IitnTt:L :ghTsiPmOua Orpsrepio e tcUebe tiwneedsSi-ne Ehoetnti:onnic aI qdhfcl ue omewdisera tauti ryn,pok. ttfeeEhi otsiset pnpihnsr.ee esncratie aaddarl.irltry seA cgt,toomio ozondigv. epza oigss iestixhopaner pciftlye,d PPaUtteTrn RDAeTctaiImyO ew iBthACBKSPREAD CWDllmaLoyHlA.E osbEEsSCny xNStAf ihrd:t Yo.T ePemA OcrCatae r H dycAUlyei A soS ciiisRfafEo yAsn:tm h hECwaeonTr irtglktEle er RoraetepcI aSdictts eTie wonlsIenCethr .Saeraar:nt te IBefm t gmohaofera ki prnmekrgteoo tiifssn itit t sn ora eaa clap caBrirsd ,uAt--
- DECAY CHARACTERISTICS:Decay accelerates as evolution: and shows signs of increasing activity with
SLSLSLooohhhnnnooogggrrrttt CSSBCSttotuorrrnaatnadtdnddeogdodrrllfrleeley MMMMMMiiiiiixxxxxxeeeeeedddddd LLLLiiiiOOmmmmppiiiieetttteeeenndddd LLLLLiiiiiOmmmmmpiiiiiettttteeeeenddddd MMMHHHeuuiiixxxlrrpeeettsssddd Peavottleu+0r-tnionBD:eUctaALimyL ew iSthPREDeActaiDBmy ewith CWsfaPLDbiinnaoOreRLEcclemtHAlOrrSCw .eeuSeESAGFaaen wNSIssY:oeTsee:Bh no u: TCDya aadrLA OeHtittai m r p caomf AeocaoUinrctfeRass de tSpatxbiAi dettEotiBuiim.sC no:,nlltgleTnnu Bair asEom lealiihs Rmftlt t i eriIee wimSa itxvws tTatep eeomiIn et C ewmthpcoSf rttfiarto:taeoeirhfmIct ki f tbitl toesei.miek,.mtAnt e aAshitwenlr. teyk.B irA tl,eetlh,pt o ig elsr iooso rlmsi if smmsiuetaepsii rtsdt ktwheoaat rn yibsku.t Peavottleu+0S-rtnioHn:ORT STAARADDLE oiiCWePLbmDssOxpeRL Eaanp HtAOSrcCidoekolESSFjAorcenumN:ISstYtTsseeO :a t:b adlT eplCyPMelp dOy erHtgmp e aonti trAnxcoU-a ooesiis knRmsaStnn eiitacAeEdotionhgzouen: C e nrdotdeIedTrafrf xad i fiEtpifnml eftiwRai t .remaaynIaeSir wdttalbklThi r oayerbekIe ynCtrefe a . rSfiftdedsFro,:oiq ojarrunTmeuertse i ecttm eeatAhnexxireidot.pp s A- np iitvrrr.,oreaaaoPa attlnofnuiisiooestdoenn-iu n tt,.dtiia,soriekaspnc ilona iamtstgyyi .tAu iiiIsfo.sttn +0- DectaimyA ewiDthectaBimy ewith gPcLatfDlEedoohoxnOreRtEse liretcOsltASCea aa sSeertAfFy paereaa:q IYso codTrtriMu mr n:l f.pyCie iAgLfs rva xHdiii ohtcaxfmmp ebo AiBlimnciiaemar,rtRatgrbnaeag yAkuoird ttr lepkmep iCiw totloeartoTy.i otnintl loEn let ofi. nuoRs gsaisTt .pt cI ns d Shsscpr eoiteTaredoarewltI eaerCtela noer dA Slbaosnisd :zutifasdte leIt sipefe iad tosr.,lmhl oa p tlieosfaeefhi t rtnnsme mk ms- a eeou tacottnsrpc hrnatdirks satduer iehanadade tplt ie- si fioibAn.dosyf ,lrfy.
Short Strangle Mixed Limited Open Helps BEAR SPREAD CLASS:Directional Decay with time pmiackxeimd iuzepd a itf imncarrekaesti nisg nreaater Aas. expiration nears, BOX OR CONVERSION CLASS:Locked trade
Call Ratio Spread Mixed Limited Mixed Mixed Peavottleurtnion: A Decay with Wor HatE lNea TsOt a U bSitE m:Boereli elivkee lmy atrok efatl lw tihlla fna lrli sseo.mewhat PatterLnONG STRANGLE CWLHAESNS: TPOre cUisSiEon:If market is within or near A-B A B WacrlleH aoEtre Np t ahTreOt om Ufi saSs Eipn:ogMr t"ofloseltgi ocs o"bm yo mfb tuohyneiln ypg uo osseirt diso etnlol.i nT"hgloe tcsoke"
Put Ratio Spread Mixed Limited Mixed Mixed + time PLOROSSF:ITB:yL iamcciteepdt.ing limit to profits,there is limit evolution: Decay with time reaitnhgeer awnady ,hmaso nbeeye nis s mtaagdnea.nItf. mIf amrkaertk eret mexapinlosdes aproes sailbtleyr nuantfiavveosr taob lcel opsriincge so.ut positions at
0 to risk. + stagnant,loss is less than with a long straddle. LONG BOX:Long a bull spread,short a bear spread.
CBaalclk RSaptrieoad Mixed Mixed Limited Mixed - Dectaimy ewith B DbeEtCwAeYen C AH aAnRdA BC,TnEoR tIiSmTeI CeSff:eIcft m.Aatr kAe,tp irso mfitisdway 0 PLOROSSF:ITL:i mOpiteend-.ended in either direction. SHORT BOX:Long a bear spread,short a bull spread.
Put Ratio iinnccrreeaassee aatt fmaastxeimstu rmat era wtei twh ittihm teim.Aet. B,losses - A B DopEtCioAnYs aCpHpAroRaAchC TeExpRiIrSaTtiIoCnS,:bDuetc naoyt a acsc erlaepriadtleys aass
Backspread Mixed Mixed Limited Mixed with long straddle.To avoid largest part of decay,
BBCoouxn yvoerr sioCnall (+Ne)u t raPlutA b(so-l)ute LAibmRsoilisuttkeedNeutral Peavott+0le-uLrtniOonN: GA BUTBTERCFLY CWamBPaiLn tO-RLlo A HolAeOnSa.nxEtsTSSFgphNthS I- i:Titomr :seTa Mr P:roi OtsmmriaMn oe axt oUncoa hirirm.Sxp.esuTiiEt ulmotihe:omoni uMnso gm flpsaoo te yr,shpor sciubrf,eoomieisstfn . tbied tEno;e enoctfivtte hcsehercepreeluc ordrwkerp s daahst dihid,erf envae imsoa,lcm nwrt1aeito0oritatk%sinhgcet, ae totoilo s onirvu s tecals aeoalllyustsl sye tiB ,nso.f PeavottleSu+0rtnioHn:ORT SATRBANGLE CWrgtPptaoaouRLn kHteAbOge-secESe F a oiN SIanlaTfl:ct f n:Totv PdiMpeO vrs,oereta tscsa,UhxiiiorgsiotSimniinsuooEk augenn: tmhim iIsopf a plnprmecli,roostaomisyrvrf ekoitettdheo,n ea.ti es eqnyi sxu q w ipauwsili isrtmeitha thoa tinsipidnohgte oni oo;dr.rintof n wsriette nracca.reod IiAnfpd t-mtlBiesn.a uirfekset porTpioctteiao olnf {Loss Profit0 Sptrriickee Brea41Ak -tmme veooexn..p lllieeirnffaettt0ion
Sell Unlimited Decay with time oDunfE tsCiplA rfeYina adCl. HmAA ovRneAtrhyC, cTdoEunRrsiIneSgrTv wIaCthiSvi:cehD t edracisadtyein .ncetigvleig pibaltetern - Decay with time pLDOiEckSCeSAd:Y Ou Cpp HeanAt- aeRnnA diCneTcdr.EeRaIsSinTgIC rSa:teT iams ee-xvpailruaet idoenc naye aisrs, UndeFralylliinngg i n s t r u mRiesinntg price
Risk of butterfly forms. maximized if market is within A to B range.
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