Archive for the ‘option spread trading’ Category
http://www.sjoptions.com presents a Broken Wing Butterfly Spread Strategy on DIA. An Option Trading technique for a move to the downside on the stock market.
Duration : 0:7:38
http://www.sjoptions.com/optionstradingsystem.html
See how the San Jose Options trading system is one of the most unique option strategies on the market. Learn to trade with risk free insurance, something that at one time was thought to be impossible. Read more about our option trading system below or visit our website for more information.
WE JUST GOT BETTER!
We already had some of the safest option trading strategies ever taught anywhere,
but one thing leads to another, and we just got even better!
RECENT DISCOVERIES : RISK-FREE INSURANCE
Recently, weve developed a Self-Adjusting trading system which in a few words is Simply Amazing! What weve done is discovered a way to trade with nearly Risk-Free Insurance. What this means is that the insurance we use to protect our trades virtually risks nothing if we do not use it. In a normal situation, insurance strategies lose money each month and eat up your profits, but weve designed a way around this problem!
A REAL-LIFE TRADING EXAMPLE
Lets say you want to trade an Iron Condor, but you want to do this with insurance to the upside and to the downside. Well, 99.99% of all option traders only know how to design a trade where the insurance will eat up most of the profits if the Iron Condor is profitable. With our newly designed Risk-Free Insurance Method, we can trade the Iron Condor with surrounding insurance plays which do not take away from the Condor profits. In fact, many of the insurance plays will also make money while simultaneously adding insurance to the position!
STRATEGY FEEDBACK
Student feedback on this new strategy has been more than awesome, and I am loving it myself. In all my years in options education as a former student and now as a mentor, I have never seen or heard of this technique. Students are saying that I invented this. They could be right, but all I know is that our new Risk-Free Insurance Strategy is the best thing I have ever seen when it comes to trading options.
WHAT THIS IS NOT!
This is not just simply putting an option spread such as a Calendar or Butterfly to the upside and downside of our trades. That style of trading is what ordinary traders do. That type of protection takes away most of the profit you can ever make at the money.
The brilliance of our Risk- Free Insurance concept is that it’s just that: Risk-Free Insurance! Our option trading system blows all others away because of this. You get protection, but this protection does not cut into your profits on Condors and other ATM income strategies. It’s genius. It’s truly an award-winning option strategy.
Duration : 0:5:6
I have started to trade option spreads, credit spreads to be exact. Since most of the positions are short term, do you know how they are taxed?
The IRS uses the term "straddle" to describe an option spread.
The taxation is covered in IRS Publication 550. See the following sections:
Short Sales . . . . . . . . . . . . . . . . . 54
Wash Sales . . . . . . . . . . . . . . . . . 55
options . . . . . . . . . . . . . . . . . . . . 56
Straddles . . . . . . . . . . . . . . . . . . . 57
The primary objective of the straddle rules is to prevent you from claiming a realized loss on one leg of a spread while you still have an unrealized gain on another leg of the spread. A secondary objective is to prevent the holding period of a security from including time that a position is hedged.
Taxes on spreads are usually short-term capital gains or losses, assuming you are not a professional trader. If you are a professional trader, and you make the mark-to-market election, none of the above applies.
http://www.optionvideocourse.com Option Spread trick to lock in profits on a trade while leaving more upside. Watch this video on this little known option trading strategy.
Duration : 0:2:57
http://www.optionvideocourse.com DONT Trade options Until You Watch This VIDEO! Learn how to trade option spreads the right way. This video teaches techniques for closing profitable positions. Free video report
Duration : 0:2:6
http://www.creditspreadstrategy.com DONT trade option CREDIT SPREAD until you see what happened to me. Learn these dangerous pitfalls before trading option credit spread. Watch video and get FREE REPORT!
Duration : 0:2:53
I am worried about are 2 things, if assigned early, say the strike is at 45 and the stock is at 50, Will the person calling my shares away basically put in my account $4500.00 and I would need $500 in margin or cash in my account finish giving the holder of the call his 100 shares, or would I need the whole $5,000 on margin to cover the transaction. Other worry is wouldnt this also leave my other option vulnerable, in other words the spread aspect is gone until I can sell the option I own, it could swing wild at opening in either direction. Is this correct? anyway around this?
Thanks for the help!
Oh thanks for clarifying very interesting, If I have it right this happens,basically the day after the options are exercised, the next morning, they replace the -1 option I had with a -100 share short postion and cash from the one who
is getting the shares. So I would just go in and close out the poistion by buy ing the shares and selling the call option I still own. I think thats correct, Thats for the answer very helpful!
<<<if assigned early, say the strike is at 45 and the stock is at 50, Will the person calling my shares away basically put in my account $4500.00 and I would need $500 in margin or cash in my account finish giving the holder of the call his 100 shares, or would I need the whole $5,000 on margin to cover the transaction.>>>
You would have $4,500 paid to your account. Your margin requirement should be $4,000 as long as you hold the long calls since you can cover the short stock position at any time for $4,000. Since you sold the stock for $4,500 you have at least $4,500 in margin available so there is no additional margin requirement.
However, the fact that there is no requirement/reason for your brokerage to require any additional margin does not necessarily mean that they do not. Each brokerage is allowed to set higher margin requirements than the SEC specified minimums. Sometimes brokerages have strange requirements, so you should check with the particular brokerage you use.
<<<Other worry is wouldnt this also leave my other option vulnerable, in other words the spread aspect is gone until I can sell the option I own, it could swing wild at opening in either direction. Is this correct?>>>
No, it is not correct. The short stock position and the long call position are offsetting so you still have a valid spread. However, it is now a bearish spread instead of a bullish spread.
If the stock goes up, it does not matter how high it goes. You can still exercise your call position to buy the stock for $40 per share. There is no upside risk.
If the stock drops significantly, the profit from your short stock position will go up faster than the loss from your long call position. In fact, about the best thing that could happen for you is for the stock to drop to $0.01 per share. Your long call would expire worthless and you could cover your short stock position for $0.01 per share, giving you a profit on the stock of $44.99 per share.
<<<anyway around this?>>>
Neither of the concerns you mention is a problem. However, there is one potential concern you should understand if the stock pays a dividend. If you are short the stock when it goes ex-dividend you are required to pay the dividend. So, it is possible that the holder of the option at $45 could exercise it the day before the stock goes ex-dividend, in which case you would not receive the assignment notice until the following day after the stock is ex-dividend. That is the only significant risk you have from an early assignment. You can avoid this problem by avoiding call spreads on stocks with significant dividends or by closing spreads before the stock goes ex-dividend.
Demo on how one can increase Theta while neutralizing Vega on an option spread.
Duration : 0:6:34
I understand the implications with the wash-sale rule with stock and option’s trading, but it is interesting to see how it works with debit spreads, where for example you buy one 50 December call of XXX and in the same time sell one 55 December call of XXX.
The wash sale rule does not apply because you have not closed a position for a loss, and when you close the spread the options you will not be replacing a position closed for a loss.
However, the straddle rules do apply. See page 58 of
http://www.irs.gov/pub/irs-pdf/p550.pdf
Addendum
rhsaunders is absolutely wrong is saying the straddle rules do not apply. The two positions are absolutely offsetting and the straddle rules apply.
Read the definition of offsetting positions in Publication 550.
http://www.millionaire-trader.com Here is a clip from the Sold out Making Money From Global Financial Trading Day. For over 8 hours Vince Stanzione revealed his secrets to a worldwide audience with attendees coming from China, Australia, USA, Europe and the Middle East. Vince Showed how he had made over £3.7 million pounds trading profits spending less than 30 mins a day working from anywhere in the world. To find out more and how to enrol for the 2009 millionaire trading program www.millionaire-trader.com
Comments about Vince Stanzione
Just a few lines to thank you the excellent seminar. After the first session on Friday I placed 2 bets during the break with what I had learnt. By the end of day one I had made just over £2,000.00. By the end of Monday thanks to the 300 point drop on the Dow I made a further £3,000.00. So I went from knowing little about trading at 9.30am Friday to making just over £5,000 total profit tax free by the close of business on Monday. To say I am delighted is an understatement. Attending this event was the most profitable and rewarding thing I have ever done, and I look forward to receiving the videos in due course so I can review and continue to learn.
Ajit Singh, Leicester
Duration : 0:9:3