Recent Posts
Posted by
A Mahendra on
Apr 27th, 2010
The first and most basic of the neutral option strategies is the butterfly spread, which is a combination of two vertical spreads. Therefore, it’s important to review vertical spreads before attempting to understand the butterfly strategy. A butterfly spread is...
Posted by
A Mahendra on
Apr 13th, 2010
In earlier posts, we covered directional trading strategies that consist of option vertical spreads. A vertical spread can be a bullish (long call spread) or bearish trade (long put spread), but our trading toolbox still lacks strategies for trading neutral...
Posted by
A Mahendra on
Mar 3rd, 2010
A bear put spread is a fundamental bearish spread in options trading, composed of two put options with different strike prices that expire in the same month, where a “HIGHER” put strike is purchased and a “LOWER” put strike is sold,...
Posted by
A Mahendra on
Mar 3rd, 2010
A bull put spread functions in the same manner as a bull call spread, except that put options are used rather than calls options to initiate the trade. In a bull put spread, a “LOWER” put strike is purchased and a “HIGHER” put strike is sold,...
Options 101
Discussing Volatility “The VIX”

In an earlier post, we looked at how vega can either have a positive or negative affect on any given position since it is a measure of volatility. So what is volatility?
Volatility is loosely defined as the “range” a particular stock or index may trade within. For example, a highly...
Advanced Strategies
Butterfly Spread Explained
The first and most basic of the neutral option strategies is the butterfly spread, which is a combination of two vertical spreads. Therefore, it’s important to review vertical spreads before attempting to understand the butterfly strategy. A butterfly spread is primarily used to trade neutral or...
Market Thoughts
Jan 2010 Pullback
Last week (Jan 19th to 22th) we saw a pullback in all three major indexes associated with the uncertainty surrounding regulation for the banking industry and whether Fed Chairman would be confirmed for a second term. Over a period of 4 days, the DOW dropped almost 500 points since it peaked on 19th Jan,...