Friday, August 29, 2008

Index of Option Spreads

many a times, we can make sound assessment on where an underlying maybe heading towards but quite lacking the correct skillsets to capitalize on that judgement.

for most investors/traders, buying or shorting stocks, indexes, ETFs, even commodities are just about the only ways to engage the market.

fortunately, Options as the derivative, can be deployed in more ways than one, either to manage portoflio risks, obtaining acceptable risk/reward returns, or simply to profit, and thus may be used as an alternative investment vehicle to trading the actual underlying.

over time, i hope to dwell into each of these Option Spreads and strategies, postulate when each can be deployed under different market conditions, their associated risks, rewards and profit potential.

meanwhile, below lists the various Option Spreads and suggests which ones can be deployed under 4 different market conditions.




a word of caution. not all option spreads are suitable for the retail trader/investor and some may have associated unlimited loss potential.

hence, it is not wise to begin trading any of the above option strategies until one has sufficient knowledge about options trading.

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