What are the spread of options?

Spreams Options Spreaps are options for trading in options that include current contradictory positions at different prices of exercise or strike prices. Prices include estimates about future volatility; The range of options is a useful tool for minimizing the risk when performing incorrect estimates. Vertical consists of one long possibility and one short. Both must have the same expiration date but will have different strikes or exercises. Depending on which strikes are purchased and sold, it can be vertical either bear or bull. Sales (or buy) an option with a lower price (or call) when purchasing (or sale) that is a higher price is a bull; We take the vice versa, vertical will be bear. Vertical options have a limited risk, but have limited profit potential.F sold options. For example, the spread of bull conditions can be created by selling calls with a lower price and buying twice as many calls with higher prices. If the price moves dramatically higher, it will beFive profitable. Due to the dependence on the rapid movement of the price, the port ports are classified as a volatility range.

Butterflies strategy is more complicated to extend from the possibilities of purchased and sold at three different strike prices. All three positions (legs) are of the same type; Either he gives everyone or all calls, all with the same expiration date. If the basic shares per 100, a long butterfly could be made by buying (or calls) to 95 and 105 and by selling twice as many bows (or calls) per 100. Maximum profit comes if the underlying shares are 100 and the maximum loss is maximum loss. The short butterfly reverses and sells and the maximum profit occurs if the price ranges as far from 100. It is a bet on increased volatility.

Related possibilities of spreading can create a combination of a bull call (or DAL) spread out with honeythey know. If these two span are centered at the same price - for example, a short place to 95, a long put and a long call at 100 and a short call to 105 - called a iron butterfly . As regards the potential of profit and loss, it works very much like the basic strategy of butterflies. If these two span do not overlap, the position is called Condor .

All options above are spread with the same expiration dates. The calendar or time spread includes multiple positions with different expirations. The long -term range includes the sale of one option and the purchase of the other at the same exercise price, but will expire later. As a long butterfly, it is a bet against growing volatibility. A short span is conversation; By selling a longer -term possibility, the position is sensitive to the increase in volatility.