16 lines
1.1 KiB
Plaintext
16 lines
1.1 KiB
Plaintext
Condors and Butterflies
|
||
The “wing spread” family is a set of option strategies that is very popular,
|
||
particularly among experienced traders. These strategies make it possible
|
||
for speculators to accomplish something they could not possibly do by just
|
||
trading stocks: They provide a means to profit from a truly neutral market
|
||
in a security. Stocks that don’t move one iota can earn profits month after
|
||
month for income-generating traders who trade these strategies.
|
||
These types of spreads have a lot of moving parts and can be intimidating
|
||
to newcomers. At their heart, though, they are rather straightforward break-
|
||
even analysis trades that require little complex math to maintain. A simple
|
||
at-expiration diagram reveals in black and white the range in which the
|
||
underlying stock must remain in order to have a profitable position.
|
||
However, applying the greeks and some of the mathematics discussed in
|
||
previous chapters can help a trader understand these strategies on a deeper
|
||
level and maximize the chance of success. This chapter will discuss condors
|
||
and butterflies and how to put them into action most effectively. |