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Posts Tagged ‘Rule Of Thumb’


Options Trading Mastery: Spread Prices

By Administrator on Friday, October 17th, 2008 | No Comments

Vertical spreads will trade between its minimum and maximum values – zero and the difference between the two strikes. In the case of a vertical call spread, the spread will trade closer to zero when the stock trades closer to or lower than the lower strike price. The spread will trade closer to maximum value [...]

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Options Trading Lesson: Volatility

By Administrator on Monday, October 13th, 2008 | No Comments

To get a firm grasp of volatility’s effect on vertical spreads, let us examine three spreads against different implied volatilities while keeping the stock price constant at 67.5. These are the 60 – 65, 65 – 70 and 70 – 75 call spreads.In-the-Money Vertical SpreadsLooking at the in-the-money spread (June 60 – 65), we see [...]

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