XLF Diagonal Spread Trade Using OptionVue Trade Finder
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http://support.theoptionclub.c... '>http://support.theoptionclub.c... **Free Options Trading Lessons**
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With the financials potentially finding a bottom and implied volatilities high, there is a temptation to begin selling put options.
In this video we take a look at the price chart for XLF, the Financial Select Sector SPDR, and consider what option trade provides us the best of all worlds.
But, rather than simply begin selling puts, or put vertical spreads, we also take the time to see what OptionVue 5's TradeFinder can come up with for us.
We found an interesting diagonal spread, which allows us to sell puts exactly where we would like from now until the end of the year but also provides us with downside protection limiting our maximum risk of loss to just $4.
We have prepared a free on-line course that will help you lay the foundation for becoming a successful options trader. I encourage you to provide you name and e-mail address, and make use of the resources that we have made available for you.
http://support.theoptionclub.c... '>http://support.theoptionclub.c...
Christopher Smith
TheOptionClub.com
Channel: Education
Uploaded: November 30, 1999 at 12:00 am
Author: clslaw66
Length: 10:22
Rating: 5.0
Views: 2575
Tags: OptionClub OptionVue Stock Options Investing Diagonal Option Spread Trade XLF ETF Exchange Traded Fund Financial Sector Naked Put Covered Call
Video Comments
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clslaw66 (November 30, 1999 at 12:00 am)
OptionVue calculates best case / worst case returns based on the projected price range for XLF. The idea behind the programming is that you want to establish an expectation for price movement, whether it be a non-directional or directional opinion. The implied assumption is that if the underlying fails to conform to your expectations that you'll either exit or adjust, accordingly.
mcharr97 (November 30, 1999 at 12:00 am)
Could you explain how do you (or OptionVue) calculates the Worst-Case-Return??
Worst Case Scenario would be XLF goes below 15, or even 10, in that case you'll loose 100% of your $1000 position (not 14%) |
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