Option Spread Trading: A Comprehensive Guide to Strategies and Tactics
The options industry has experienced incredible growth in recent years. With multiple exchanges now vying for orders from the public, the speed of execution has increased while the cost of trading options has decreased. This has leveled the playing field to the point where individual traders can not only compete in the options arena, but also capture consistent profits.Nobody understands this better than author Russell Rhoads—an instructor for the Options Institute at the CBOE—who has helped thousands of people successfully incorporate various options strategies into their everyday trading endeavors.Now, withOption Spread Trading, he shares his extensive experience in this field and reveals what it takes to put the power of option spreads to work for you. Before getting into a detailed discussions of spread trades, this reliable resource opens with a quick overview of essential option knowledge, lays out the mechanics of putting on very basic positions involving two trading instruments, explores different approaches to creating similar payoffs, and covers the "Greeks."From there, you'll be introduced to a variety of spread strategies, with each chapter focusing on a specific one, and discover how to choose and use the best strategies for certain situations.STRADDLESSTRANGLESBULL AND BEAR SPREADSBUTTERFLY SPREADSCONDOR SPREADSRATIO SPREADSBACKSPREADSCALENDAR SPREADSDIAGONAL SPREADSRounding out this comprehensive guide to option spread trading are some specialized chapters that address the concept of Delta-neutral trading—with an example of how market makers basically use isolating price risk when providing liquidity to the market place—and the issues involved in executing a spread trade.Designed in a modular format with each chapter laid out in a similar fashion, including examples of how each spread would be constructed and key levels to focus on,Option Spread Tradingis a flexible guide that will help you get the most out of every option you trade.