The Trader's Guide to Equity Spreads - Tapa dura

Minimize risk and maximize your return with option spreads

Option spread trading is by far the most varied and versatile strategy for income generation, hedging, and speculation. To achieve longevity in the trading arena, you must understand how these spreads work and the ways to leverage them for a consistent flow of positive returns.

The Trader's Guide to Equity Spreads provides the essential info you need to set up and manage option spreads. Trading expert Randy Frederick examines each spread strategy in detail. He provides real-world examples that can be applied to all option markets--equity, futures, stock index, and interest rate--to demonstrate effective ways to control risk and increase your profits.

Frederick begins by explaining how the price of an option is calculated and how it relates to the underlying stock, exchange-traded fund, or index. He then introduces you to the spreads--from Vertical and Horizontal to Butterfly, Box, and Gut spreads--and helps you identify potential candidates for each strategy. Frederick reveals:

• Where to start if you've never traded spreads before
• The key characteristics of each spread (direction, magnitude, velocity, and volatility)
• How to find the best option spread opportunities
• The basics of spread logic, with clarification of long vs. short spreads
• Potential advantages and disadvantages of the different spread strategies

Illustrations, charts, and tables throughout help you identify the profit/loss zones for each spread strategy. In addition, explanations and calculations highlight possible outcomes at various prices both prior to and at option expiration.

Whether you're new to options or you're ready to take on more advanced spread strategies, The Trader's Guide to Equity Spreads is the only guide you need to make options a permanent, profitable part of your investment portfolio.

Minimize risk and maximize your return with option spreads

The Trader's Guide to Equity Spreads provides a complete introduction to option spread trading, offering detailed explanations of the most popular and useful option spreads. Covering all the major option spread families - Ratios, Bull/Bear, Butterfly/Condor, and Vertical/Horizontal - as well as more advanced strategies, this authoritative, hands-on resource gives you the tools to select the right spreads for the stocks you watch.

Options expert Randy Frederick takes you through the pricing and movement of options, using sample stock charts, tables, and illustrations to pinpoint the profit and loss zones for each strategy. He reveals not only how the various spread strategies compare to similar strategies, but also ways to keep on top of the crucial pricing factors.

• Understand basic option mechanics: American vs. European, A.M. and P. M. settlement, rights and obligations, and more
• Identify the option spread strategies that are most appropriate for specific market conditions
• Set up and manage spreads using calls and puts
• Select the right strike prices
• Control risk and give your trades more leverage
• Maximize your ability to generate a consistent flow of profits with manageable risk