Net volatility is the volatility implied by the price of an option spread trade involving two or more options. In other words, it is the volatility at which the theoretical value of the spread trade matches the price quoted in the market, or, in other words, the implied volatility of the spread. Formula The net volatility for a two-legged spread (with one long leg, and … [Read more...]
Archives for March 2010
Free Stock Tips for 12th March 2010
The Various – Daily Stock Recommendation Given by the various analysts and Stock Brokers are : Reliance Capital Ltd. - Daily stock recommendation 12-03-2010 Source Action Tip Period Target Price (Rs.) Sudarshan Sukhani Buy, stop loss Rs 790 - 850.00 Suzlon Energy Ltd. - Daily stock recommendation 12-03-2010 Source Action Tip Period … [Read more...]
Box Spread
A Box Spread is a dual option position involving a bull and bear spread with identical expiry dates. This investment strategy provides for minimal risk. Additionally, it can lead to an arbitrage position as an investor attempts to lock in a small return at expiry. A box spread is a complicated strategy for the more advanced options trader. The purpose of this investment is to … [Read more...]
Ratio Spread
A Ratio Spread is an options strategy in which an investor simultaneously holds an unequal number of long and short positions. A commonly used ratio is two short options for every option purchased. A ratio spread would be achieved by purchasing one call option with a strike price of $45 and writing two call options with a strike price of $50. This would allow the investor to … [Read more...]
Ratio Backspreads
Ratio Backspreads is a Credit volatile options trading strategy that opens up one leg for unlimited profit through selling a smaller amount of in the money options against the purchase of at the money or out of the money options of the same type. As the same suggests, Ratio Backspreads are backspreads, which means that they are options trading strategies designed to profit … [Read more...]