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#1
03-08-2008, 11:59 AM
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Italian Trader
Join Date: May 2007
Location: Roma
Posts: 43
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Options Range Trading: a sample trade
I'm using HON as a sample stock to show an options range trading strategy.
Assuming HON keeps on trading within the current range(62.50 - 52.50), we could set up a trade where we would short both calls and puts. For example, we could short the 62.5 Calls and the 52.5 Puts. of course, we would make the most money if the underlying remained within the two strike prices as the options would expire worthless. It is also worth mentioning that the closer to maturity the options, the lower the risk (and the profit) you will assume. Sincerely Iacotel Last edited by Iacotel : 03-08-2008 at 12:08 PM. | |
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#2
03-11-2008, 03:17 PM
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Member
Join Date: Jun 2007
Posts: 46
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I believe this strategy has a name as I remember reading about it. anybody knows its name?
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#3
04-11-2008, 12:52 AM
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Junior Member
Join Date: Apr 2008
Posts: 12
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straddle writing perhaps
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#4
04-11-2008, 01:16 AM
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Member
Join Date: Jan 2008
Location: Philly Burbs, PA
Posts: 82
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In the case as stated you would be writing a strangle.
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#5
04-11-2008, 01:38 AM
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Member
Join Date: Jan 2008
Location: Cincinnati
Posts: 46
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This came up as the recently updated thread and I thought I'd add my two cents. This trade is only meant for an experienced trader. The risk verse reward isn't large enough for me but I do appreciate looking at different plays.
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#6
04-11-2008, 03:14 AM
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Junior Member
Join Date: Apr 2008
Posts: 12
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Quote:
Also why I am still only playing with calls, puts and simple spreads at this point in my trading. | |
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