Discussion in 'Options' started by asdfghj7, Mar 24, 2009.

  1. Sorry guys, the example in my previous messege below, doesn't make since with my figures. I've fixed it. Sorry to waste time. Thanks to those who have already helped.

    I've been recently been developing a strategy generally focused around the idea of a ratio spread trade where an ITM/ATM/or OTM call or put is purchased by the buyer, who finances it with 2 further OTM options in the same month or buying one option and financing it with a higher strike further out month option. Either way, resulting in a zero debit, and maybe even a credit. Example, if a stocks at 50, buy a June 2009 ATM call for 6pts and sell two June 60 calls for 3pts each. I'm continue to ponder different ways to structure this. Regardless of how the method will initially be set up, I'm banking that an adjustment to the trade will be the cornerstone to it's probability of producing a profit based on locking in a profit quickly after the position has been opened giving an oppurtunity to lockin a minimum profit. I've looked at regular and advanced collars, different ratios, married puts, and how different calendar spreads react differently when added to the basic strategies. I've been taking each idea and seeing what happens if I do this or that after its initiated, or starting off in different calendar months. An example would be long the stock at 100, long a six month put at 100 for 5pts and short a twelve month Call at 130 for 5pts. If this doesn't work, then in six months I'll do it again to breakeven or a small profit by adjusting, doubling or whatever. I love how a ratio spread trade is profitable from the start, however, the markets ability to go up or down too fast continually looms and may not give me the oppurtunity to adjust the naked call or put in the ratio spread trade. I also thought of doing a ratio spread trade to the short side only by buying a 10 put and selling two $5 puts to pay for it. If the market goes to zero, thats a much better position than a 10 call purchased with two 12.50 calls and the market goes to the moon. Please personally messege me. I've often noticed that the first or second person who answers a question, usually ends up having to deal with some other trader who doesn't agree. Thanks for the time. I do appreciate it.

    Edit/Delete •