Recent Articles and Videos


Closing the Time Spread Position

Thursday, November 29, 2007
Filed Under Intermediate Options Trading 

It is important to remember that the time spread will leave you with several potential positions that can be altered by other options or stock in numerous ways. There are a number of decisions you must make to clarify your understanding and goals. First, it is important to understand what position you are going to…click to read more.

Rolling the Position Time spreads are unlike all the other strategies we have discussed before when we talk about rolling or continuing the position. In other strategies, the option component is limited to a single month. At expiration, the position disappears. It either transforms into stock or expires worthless leaving you with no option position.…click to read more.

Market Talk November 25th, 2007 – Part 1

Tuesday, November 27, 2007
Filed Under Video Updates 

Market Talk November 25th, 2007 – Part 2

Tuesday, November 27, 2007
Filed Under Video Updates 

Seller Risk/Reward

Tuesday, November 27, 2007
Filed Under Intermediate Options Trading 

The seller of a time spread buys the nearer month option and sells the outer-month option in a one to one ratio. In order to profit from the sale of the time spread, the seller is looking basically for two things. First is a decrease in implied volatility. As volatility decreases, the out-month option (which…click to read more.

Buyer Risk/Reward

Monday, November 26, 2007
Filed Under Intermediate Options Trading 

Like most trades, time spreads have a maximum loss for the buyer. As a buyer, you can only lose what you have spent. If you paid $1.00 for the spread then your maximum potential loss is that $1.00. If you bought the spread for $2.00, then $2.00 is the maximum potential loss. The buyer of…click to read more.

To be able to calculate the volatility of the spread, we must equalize the volatilities of the individual options. First, let’s move the June calls by moving June’s implied volatility down from 40 to 36, a decrease of four volatility ticks. Four volatility ticks multiplied by a vega of .05 per tick gives us a…click to read more.

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