Butterfly Spreads
A butterfly is a volatility bet that the trader can implement to protect against large fluctuations, or to gain on volatility. Read this article to learn more!
Author Archives: Bavan Arumugam
Strangle Spread
A Strangle is a volatility bet where you simultaneously long a call at Strike Price 2 and long a put at Strike Price 1. This article describes the differences between a strangle and straddle spread, as well as what a strangle spread includes.
Straddle
This article describes Straddles, which are a volatility bet where you simultaneously long a call at Strike Price 1 and long a put at Strike Price 1. This creates a triangular shaped payoff and profit graph where the reward is based on the volatility of the stock. Click here for more details.
Collar Spreads
A bullish collar is a protection strategy where you simultaneously buy a call at strike price 1 and sell a put at strike price 2. This strategy is for investors who has a bullish perception on the underlying asset. We can also create a “bearish” collar by simultaneously buying a put at strike price 1 and selling a call at strike price 2.
Ratio Strategy
A ratio strategy is an option strategy that is created by having X amount of call options at Strike Price 1 and shorting Y amount of call options at Strike Price 2. This post gives you what you need to know about when and why to use ratio strategies, what their payoff and profit graphs look like, and what the break-even point is,
Box Spreads
A box spread is an option strategy that is created by combining the components of the bull spread and the bear spread. Read this article to learn more!
Bear Spread
A bear spread is a strategy where you simultaneously sell a put at Strike Price 1, and buy a put at Strike Price 2. Read this article to find out when and why you should have a bear spread, what payoff and profit graphs look like, and what the break-even point is.
Bull Spreads
A bull spread is a strategy where you simultaneously buy a long call at Strike Price 1, and sell a call for Strike Price 2. Read this article to learn about when and why you should use a bull spread, what the payoff and profit graphs look like, and what the break-even point is.
Cap
A cap is an options protection strategy where you simultaneously have a short position on a stock and a long call for the same underlying asset. Adding a long call to your open position means that you are obligated to buy your stock at the strike price. Read this article to learn when and why you should use a cap, what the payoff and profit graphs are, and what the break-even point is!
Floor
A floor is an options insurance strategy where you simultaneously have a long open position on a stock and a long put for the same underlying asset. Adding a long put to your open position means that you are obligated to sell your stock at the strike price. Read this article for insight on when and why you should have a floor.