A number of different techniques and strategies are available to option investors to help assist them in achieving consistent and reliable monthly income from the option market.
For example there is the butterfly spread, the iron condor, the diagonal (an/or the double diagonal), and the calendar spread, the double calendar spread - and, the Vertical Spread, which is sometimes also referred to as the Credit Spread.
The vertical spread (or credit spread) is a foundational trade that can be found in many other option income strategies. The iron condor spread is in actuality just two vertical spreads placed on either side of where the market is trading.
The butterfly position is also comprised of vertical spreads. The lower half portion of the butterfly spread is simply a vertical spread - as is the top half. Same goes with the iron butterfly. This trade also is built from verticals - a call vertical and a put vertical.
Vertical spreads can be used with both put and call options. A bearish vertical is called a bear…
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31 August 2010
Forex Trading
Currency Trading, finance, Forex, Forex Trading, investing, investment, option trading, personal finance, stock, stock market, stock trading, trading, vertical spread, wealth building
A cash flow option technique that is used by both professional traders as well as retail traders is the Calendar Spread. This technique is a favorite among option traders who use options as a way to generate reliable monthly cash-flow.
The calendar spread performs best and kicks off income due to the nature of the trade. This is a theta trade - an option strategy that takes advantage of options decaying value. As the days tick by heading towards expiration day - the time premium in the options lose their value. This in turn is what creates the profit for the calendar spread trader.
These trades can be built from call options as well as put options. In order to create a calendar spread trade, the option trader sells a near month strike on an underlying vehicle - and then buys a later month at the identical strike. Profit can be made from this trade because what happens over time is that the time premium in the closer month option decays at…
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Forex trading is can be fun and profitable; it’s nice to be able to watch your money grow as you trade currencies. Managing you Forex accounts can be problematic sometimes if you are holding down a full time job or you have many accounts that you are working with.
Some options that are available to you are putting your money in a managed Forex account. A managed Forex account is something that is available to Forex traders and will help them greatly. The general idea is that the business that his managing your account does the trades for you.
A professional trader will be assigned to you who know what he’s doing. They are experienced and know all the tricks of the trade. You can say this is the true meaning of the term “Autopilot”. Your broker will know when to buy and sell.
There are people who are turned onto this idea and like the ease of use. The money is still yours to control and through a simple interface on the…
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Currency/stock trading and personal finance compliment each other very well. Even those who don’t trade their own money are most likely having it traded by a big company if it’s in a retirement fund.
Stock trading has been around for a while, and it has defined the lives of many people over the years. Many people have gained fortunes in stock trading, and many people have lost fortunes in stock trading.
I actually used to think I wanted to be a stock broker. I used to watch Jim Cramer all the time on tv and would pretend that I was trading stocks myself with fake money. There’s something fascinating about gambling your money into companies and hoping that their company does well over the next few months.
There’s a misconception that trading stocks is just as bad as gambling, but this is simply not true. I will say that it is just as bad as gambling to most people, but this is because most people are not educated in stocks enough to make…
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The iron condor is one of the most popular option strategies available to traders. Unfortunately, it is also possibly the most dangerous.
The problem is that way too many new option traders slap down significant money and start trading iron condors immediately upon discovering them without first equiping themselves with the proper knowledge and skills needed to trade them properly. They are so captivated by the stories and claims of ten percent months and 90 percent probabilities that somehow they don’t stop to think about what they are going to do if their trade doesn’t go exactly as planned.
And unfortunately what always seems to happen to a high percentage of them is that they promptly wind up getting their trading accounts demolished and their heads handed to them on a platter.
Now stop - wait - hold on just a second.
Before you start to get the wrong impression, please, let me clarify something here.
I absolutely LOVE iron condors. ALOT. In fact, the iron condor is right up there as one of my favorite…
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8 July 2010
Forex Trading
Currency Trading, finance, Forex, Forex Trading, investing, investment, iron condor, option trading, personal finance, stock, stock market, stock trading, trading, wealth building
