OPTION LESSON OF THE WEEK
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By Frank Kneipher, Senior Pristine Option Strategist
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WHY OPTION SPREADS?
As we approach Option Trading, not only should we become aware of the different Spread Strategies, more importantly we need to understand the variations that each one can provide, along with when and where to apply them.
When becoming firmiliar with Options, and in this particular case, Option Spreads, we need to keep an open mind to realize the impact. This will allow us to understand the true Advantages that are provided when Spreads are used properly.
With a clear understanding, we will have the abilty to blend this knowledge with any Observation made, in any Market Condition, in any Timeframe to suit our own Individual Objective. |
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In the single example below, we are using a BEAR CALL Spread where the Strategist is Selling the 155 CALLS and BUYING the 160's. Although designated a Bearish Strategy, the trade remains profitable even with a non-significant rise. |
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In essence, this particular Spread wins in all 3 Market Directions as the Strategist can be wrong in Market Direction and still be successful as long as UBB does not rise by more than 6.05 at Expiration. |
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Join me this coming Tuesday, June 2 at 4:15 PM EST, for a FREE Interactive Option Workshop.
Register Here, to learn more about Effective Option Strategies and see how they performed in the recent Market.
Trade Smart !!! |
| Options
carry a high degree of risk and are not suitable for all
investors. You must balance the opportunity of options
trading with the corresponding risk involved. Prior to
buying or selling an option, a person must receive a copy
of Characteristics and Risks of Standardized Options. Copies
of this document are available from your broker or the
Chicago Board Options Exchange, 400 S. LaSalle Street,
Chicago, IL 60605. |
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fk@pristine.com
Pristine
ESP™
Click Here
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Please keep in mind that all comments made by Pristine instructors and representatives are for educational purposes only and should not be construed as investment advice regarding the purchase or sale of securities, options, futures or any other financial instrument of any kind. Consult with your investment advisor before making an investment decision regarding any securities mentioned herein. Pristine instructors and representatives assume no responsibility for your trading and investment results.
Information for the stock observations was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. The author as well as other Pristine employees, representatives and "affiliated" individuals may have a position or effect transactions in the securities herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.
There is a very high degree of risk involved in any type of trading. Option and Futures trading is not suitable for all investors. Past results are not indicative of future returns. Pristine Capital Holdings, Inc., its subsidiaries and all "affiliated" individuals assume no responsibilities for your trading and investment results.
Pristine
Capital Holdings, Inc.
7-11 South Broadway, Suite 210
White Plains, NY 10601
1-914-682-7613
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