Hello, I'm looking to take a straight equities trade and trade it using options. Here are some of the details of the equities trade and what I'd like to accomplish with the option trade: 1. The equity trade buys when vol is up, I want the options trade to be short vol. 2. The equity trade buys expecting price to rise, I want the options trade to capture any rise in underlying price. 3. If need be I am willing to be assigned the stock. I don't want to just sell puts though. 4. Fixed risk would be nice, although point 3 implies I might see a significant drop. 5. 4 week hold time (20 days). I'm hoping someone can help me through the pros and cons of what I can do with various options strategies. FWIW I already sell naked puts (on stocks I eventually want to own) and trade verticals, but, that's where my knowledge ends. Thanks, Mike
Ok, thanks. So I'm buying a call spread and then selling a higher call spread. My gains are capped and I'm not sure how this trade takes advantage of dropping vol? How can I alter this trade to take better advantage of the dropping vol, and, take on more risk? I am willing to own the underlying...