THE IMPORTANCE OF UNDERSTANDING THE RISKS INVOLVED WITH OPTIONS

Options are risky investments not only because they create leverage but also because they take expertise level knowledge and/or experience to understand their behaviors. Once you understand the fundamentals of plain-vanilla options it becomes much easier to understand and anticipate behaviors of structured derivative

ADJUSTMENT STRATEGIES AND RISK MANAGEMENT

Options are products with expiration dates and many of their characteristics change constantly depending on many factors including the passing time. This dynamic nature of options requires investors to adjust their investment strategies so that everything remains on track as initially intended.             In

IRON CONDORS

Iron condor is a non-directional structured option strategy and it is comprised of 2 vertical spreads: 1 call spread and 1 putspread amounting 4 options in total (2 call and 2 put).             An iron condor allows you to profit as long as the underlying price

POOR MAN’S COVERED CALL

Covered call strategy is probably one of the most popular structured derivative strategy in the investment world. It has a simple logic, it is not extremely risky relative to how risky options can be and it gives you the opportunity to be on the

STRADDLES, STRANGLES AND BUTTERFLIES

Straddle, strangle and butterfly strategies each offer very interesting risk/profitprofiles and various outcome possibilities. If you know some of the optiontrading fundamentals, market dynamics and technical parameters about options(such as greeks, time decay, volatility etc.) it might be beneficial to acquireknowledge about some of the

VERTICAL SPREADS

Vertical spreads are created by same kind of options (call or put) on the same underlying security and with the same maturity date but different strike prices. For instance, Iron Condor strategy that’s been demonstrated in the previous post is a strategy that is

STRUCTURED DERIVATIVES

Butterfly Option Trading Strategy Iron Condor Option Trading Strategy You can see structured derivatives as products created by mixing different derivatives and securities to achieve customized outcomes. Often in this mix two options on the same underlying asset but different maturity dates, different types (call, put) and/or different