, 288Long Call Butterfly strategy, 189Long Call Condor strategy, 199Long Put Butterfly strategy, 194
Long Put Condor strategy, 204Short Call Butterfly strategy, 149Short Call Condor strategy, 158Short Call Synthetic Straddlestrategy, 264Short Call Synthetic strategy, 268Short Guts strategy, 185Short Iron Butterfly strategy, 167Short Iron Condor strategy, 171Short Put Butterfly strategy, 153Short Put Condor strategy, 162Short Straddle strategy, 177Short Strangle strategy, 181Straddle strategy, 123Strangle strategy, 128direction neutral to moderately bullishmarket outlookModified Call Butterfly strategy, 209Modified Put Butterfly strategy, 213disadvantagesof Bear Call Ladder strategy, 112of Bear Call spread strategy, 35of Bear Put Ladder strategy, 117of Bear Put spreads, 98of Bull Call Ladder strategy, 103of Bull Call spreads, 93of Bull Put Ladder strategy, 107of Bull Put spread strategy, 31of Calendar Call strategy, 60of Calendar Put strategy, 73of Call Ratio Backspread strategy, 223of Collar strategy, 244of Covered Call strategy, 27of Covered Put strategy, 86of Covered Short Straddle strategy, 50of Covered Short Strangle strategy, 56of Diagonal Call strategy, 67of Diagonal Put strategy, 79of Guts strategy, 146of Long Box strategy, 290of Long Call Butterfly strategy, 192of Long Call Condor strategy, 201of Long Call Synthetic Straddlestrategy, 257of Long Combo strategy, 281of Long Iron Butterfly strategy, 40of Long Iron Condor strategy, 45
Index
of Long Put Butterfly strategy, 196of Long Put Condor strategy, 206of Long Put Synthetic Straddlestrategy, 262of Long Synthetic Future strategy, 274of Modified Call Butterfly strategy, 211of Modified Put Butterfly strategy, 216of Put Ratio Backspread strategy, 227of Ratio Call Spread strategy, 232of Ratio Put Spread strategy, 236of Short Call Butterfly strategy, 151of Short Call Condor strategy, 160of Short Call Synthetic Straddlestrategy, 266of Short Call Synthetic strategy, 270of Short Combo strategy, 285of Short Guts strategy, 188of Short Iron Butterfly strategy, 169of Short Iron Condor strategy, 173of Short Put Butterfly strategy, 155of Short Put Condor strategy, 164of Short Straddle strategy, 179of Short Strangle strategy, 183of Short Synthetic Future strategy, 277of Straddle strategy, 125of Strangle strategy, 131of Strap strategy, 141of Strip strategy, 136of Synthetic Call strategy, 249of Synthetic Put strategy, 253
Eexercising options (taxation), 297exitingBear Call Ladder strategy, 113Bear Call spread strategy, 36Bear Put Ladder strategy, 118Bear Put spreads, 98Bull Call Ladder strategy, 103Bull Call spreads, 94Bull Put Ladder strategy, 108Bull Put spreads, 32Calendar Call strategy, 61Calendar Put strategy, 73Call Ratio Backspread strategy, 223Collar strategy, 245
Covered Call strategy, 27Covered Put strategy, 86Covered Short Strangle strategy, 56Diagonal Call strategy, 67Diagonal Put strategy, 79Guts strategy, 147Long Box strategy, 290Long Call Butterfly strategy, 192Long Call Condor strategy, 202Long Call Synthetic Straddlestrategy, 258Long Combo strategy, 282Long Iron Butterfly strategy, 40Long Put Butterfly strategy, 197Long Put Condor strategy, 207Long Put Synthetic Straddlestrategy, 262Long Synthetic Future strategy, 274Modified Call Butterfly strategy, 211Modified Put Butterfly strategy, 216Put Ratio Backspread strategy, 227Ratio Call Spread strategy, 232Ratio Put Spread strategy, 237Short Call Butterfly strategy, 151Short Call Condor strategy, 160Short Call Synthetic Straddlestrategy, 266Short Call Synthetic strategy, 270Short Combo strategy, 286Short Guts strategy, 188Short Iron Butterfly strategy, 169Short Iron Condor strategy, 174Short Put Butterfly strategy, 156Short Put Condor strategy, 165Short Straddle strategy, 180Short Strangle strategy, 184Short Synthetic Future strategy, 278Straddle strategy, 126Strangle strategy, 131Strap strategy, 142Strip strategy, 136Synthetic Call strategy, 249Synthetic Put strategy, 253expert tradersCovered Call strategy, 23exiting, 27trading, 23–28
337
338
Index
expert traders (Contd.)Guts strategy, 143exiting, 147trading, 144–147Long Box strategy, 287exiting, 290trading, 287–291Long Call Synthetic Straddlestrategy, 254exiting, 258trading, 255–258Long Combo strategy, 279exiting, 282trading, 279–282Long Put Synthetic Straddlestrategy, 258exiting, 262trading, 259–263Long Synthetic Future strategy, 271exiting, 274trading, 272–274Modified Call Butterfly strategy, 208exiting, 211trading, 208–212Modified Put Butterfly strategy, 212exiting, 216trading, 213–217Ratio Call Spread strategy, 229exiting, 232trading, 229–233Ratio Put Spread strategy, 233exiting, 237trading, 234–238Short Call Synthetic Straddlestrategy, 263exiting, 266trading, 263–266Short Combo strategy, 283exiting, 286trading, 283–286Short Guts strategy, 185exiting, 188trading, 185–188Short Put Synthetic Straddle strategyexiting, 270trading, 267–271Short Synthetic Future strategy, 275
exiting, 278trading, 275–278Strap strategy, 137–138exiting, 142trading, 138–141Strip strategy, 132–133exiting, 136trading, 133–136expirationBear Call Ladder strategy, 111Bear Call spread strategy, 34Bear Put Ladder strategy, 116Bear Put spreads, 97Bull Cal Ladder strategy, 101Bull Call spreads, 92Bull Put Ladder strategy, 106Bull Put spread strategy, 30Calendar Call strategy, 59Calendar Put strategy, 71Call Ratio Backspread strategy, 221Collar strategy, 243Covered Call strategy, 25Covered Put strategy, 85Covered Short Straddle strategy, 49Covered Short Strangle strategy, 54Diagonal Call strategy, 66Diagonal Put strategy, 77Guts strategy, 145Long Box strategy, 289Long Call Butterfly strategy, 190Long Call Condor strategy, 200Long Call Synthetic Straddlestrategy, 256Long Combo strategy, 280Long Iron Butterfly strategy, 38Long Iron Condor strategy, 43Long Put Butterfly strategy, 195Long Put Condor strategy, 205Long Put Synthetic Straddlestrategy, 260Long Synthetic Future strategy, 273Modified Call Butterfly strategy, 210Modified Put Butterfly strategy, 214Put Ratio Backspread strategy, 226Ratio Call Spread strategy, 230Ratio Put Spread strategy, 235Short Call Butterfly strategy, 149
Index
Short Call Condor strategy, 158Short Call Synthetic Straddle strategy, 264Short Call Synthetic strategy, 268Short Combo strategy, 284Short Guts strategy, 186Short Iron Butterfly strategy, 167Short Iron Condor strategy, 172Short Put Butterfly strategy, 154Short Put Condor strategy, 163Short Straddle strategy, 178Short Strangle strategy, 182Short Synthetic Future strategy, 276Straddle strategy, 124Strangle strategy, 129Strap strategy, 140Strip strategy, 135Synthetic Call strategy, 248Synthetic Put strategy, 252
Ffuturescontracts, 5Long Box strategy, 287exiting, 290trading, 28–291Long Combo strategy, 279exiting, 282trading, 279–282Long Synthetic Future strategy, 271exiting, 274trading, 272–274Short Combo strategy, 283exiting, 286trading, 283–286Short Synthetic Future strategy, 275exiting, 278trading, 275–278
G–HGuts (volatility strategy), 143exiting, 147trading, 144–147horizontal spreadsCalendar Call, 57Calendar Put strategy, 69
I–JIn the Money. See ITMincome strategies, 21–22Bear Call spread, 32exiting, 36trading, 33–36Bear Put Ladder strategy, 115Bull Call Ladder, 100Bull Put spread, 28exiting, 32trading, 29–32Calendar Call, 57exiting, 61trading, 57–62Calendar Put, 70exiting, 73trading, 70–75Covered Call, 23Covered Call strategyexiting, 27trading, 23–28Covered Put, 83exiting, 86trading, 83–87Covered Short Straddle, 46trading, 47–51Covered Short Strangle, 51exiting, 56trading, 52–56Diagonal Call, 63exiting, 67trading, 64–69Diagonal Put, 76exiting, 79trading, 76–82direction neutral. See direction neutralmarket outlookLong Iron Butterfly, 37exiting, 40trading, 37–41Long Iron Condor, 41trading, 42–45increasing yieldCalendar Call strategy, 57–62Calendar Put strategy, 70–75Covered Put strategy, 83–87
339
340
Index
increasing yield (Contd.)Covered Short Straddle strategy,46–51Covered Short Strangle strategy, 52–56Diagonal Call strategy, 64–69Diagonal Put strategy, 76–82intermediate strategyBear Put spreads, 95Bull Call spreads, 90intermediate tradersBear Call spread strategy, 32exiting, 36trading, 33–36Bear Put spreadsexiting, 98trading, 95–99Bull Call spreadsexiting, 94trading, 91–94Bull Put spread strategy, 28exiting, 32trading, 29–32Calendar Call strategy, 57exiting, 61trading, 57–62Collar strategy, 240exiting, 245trading, 241–245Diagonal Call strategy, 63exiting, 67trading, 64–69Long Call Butterfly strategy, 189exiting, 192trading, 189–193Long Iron Butterfly strategy, 37exiting, 40trading, 37–41Long Iron Condor strategy, 41–45Long Put Butterfly strategy, 193exiting, 197trading, 194–197Short Call Butterfly strategy, 148exiting, 151trading, 148–151Short Put Butterfly strategy, 152exiting, 156trading, 153–156
Straddle strategy, 121exiting, 126trading, 122–126Strangle strategy, 127exiting, 131trading, 128–131ITM (In the Money), 5Calendar Put strategy, 71Diagonal Call strategy, 65Diagonal Put strategy, 76Guts strategy, 146Short Guts strategy, 187
K–Lleveragelong call, 8long put, 16short put, 20leveraged strategies, 219Call Ratio Backspread, 220exiting, 223trading, 220–224Put Ratio Backspread, 224exiting, 227trading, 225–229Ratio Call Spread, 229exiting, 232trading, 229–233Ratio Put Spread, 233exiting, 237trading, 234–238liquidityBear Call Ladder strategy, 111Bear Call spread strategy, 34Bear Put Ladder strategy, 116Bear Put spreads, 96Bull Call Ladder strategy, 101Bull Call spreads, 92Bull Put Ladder strategy, 106Bull Put spread strategy, 30Calendar Call strategy, 59Calendar Put strategy, 71Call Ratio Backspread strategy, 221Collar strategy, 243Covered Call strategy, 25Covered Put strategy, 85
Index
Covered Short Straddle strategy, 48Covered Short Strangle strategy, 54Diagonal Call strategy, 65Diagonal Put strategy, 77Guts strategy, 145Long Box strategy, 288Long Call Butterfly strategy, 190Long Call Condor strategy, 200Long Call Synthetic Straddlestrategy, 256Long Combo strategy, 280Long Iron Butterfly strategy, 38Long Iron Condor strategy, 43Long Put Butterfly strategy, 195Long Put Condor strategy, 205Long Put Synthetic Straddlestrategy, 260Long Synthetic Future strategy, 272Modified Call Butterflystrategy, 209Modified Put Butterfly strategy, 214Put Ratio Backspread strategy, 226Ratio Call Spread strategy, 230Ratio Put Spread strategy, 235Short Call Butterfly strategy, 149Short Call Condor strategy, 158Short Call Synthetic Straddlestrategy, 264Short Call Synthetic strategy, 268Short Combo strategy, 284Short Guts strategy, 186Short Iron Butterfly strategy, 167Short Iron Condor strategy, 172Short Put Butterfly strategy, 154Short Put Condor strategy, 163Short Straddle strategy, 178Short Strangle strategy, 182Short Synthetic Future strategy, 276Straddle strategy, 124Strangle strategy, 129Strap strategy, 140Strip strategy, 134Synthetic Call strategy, 247Synthetic Put strategy, 251Long Box strategy, 287exiting, 290trading, 287–291
Long Call Butterfly strategy, 189exiting, 192trading, 189–193Long Call Condor strategy, 198exiting, 202trading, 198–202Long Call Synthetic Straddlestrategy, 254exiting, 258trading, 255–258long calls, 5selling, 8trading, 5–8Long Combo strategy, 279exiting, 282trading, 279–282Long Iron Butterfly strategy, 37exiting, 40trading, 37–41Long Iron Condor strategy, 41–45long options (taxation), 296–297Long Put Butterfly strategy, 193exiting, 197trading, 194–197Long Put Condor strategy, 203exiting, 207trading, 203–207Long Put Synthetic Straddlestrategy, 258exiting, 262trading, 259–263long putsselling, 16trading, 13Long Synthetic Future strategy, 271exiting, 274trading, 272–274lossBear Call Ladder strategy, 112Bear Call spread strategy, 35Bear Put Ladder strategy, 117Bear Put spreads, 98Bull Call Ladder strategy, 103Bull Call spreads, 93Bull Put Ladder strategy, 107Bull Put spread strategy, 31Calendar Call strategy, 60
341
342
Index
loss (Contd.)Calendar Put strategy, 73Call Ratio Backspread strategy, 223Collar strategy, 244Covered Call strategy, 27Covered Put strategy, 86Covered Short Straddle strategy, 50Covered Short Strangle strategy, 56Diagonal Call strategy, 67Diagonal Put strategy, 79Guts strategy, 146Long Box strategy, 290Long Call Butterfly strategy, 192Long Call Condor strategy, 201Long Call Synthetic Straddlestrategy, 257Long Combo strategy, 281Long Iron Butterfly strategy, 40Long Iron Condor strategy, 45Long Put Butterfly strategy, 196Long Put Condor strategy, 206Long Put Synthetic Straddlestrategy, 262Long Synthetic Future strategy, 274mitigation. See mitigation of lossModified Call Butterfly strategy, 211Modified Put Butterfly strategy, 216Put Ratio Backspread strategy, 227Ratio Call Spread strategy, 232Ratio Put Spread strategy, 236risk profile charts, 1Short Call Butterfly strategy, 151Short Call Condor strategy, 160Short Call Synthetic Straddlestrategy, 266Short Call Synthetic strategy, 270Short Combo strategy, 285Short Guts strategy, 188Short Iron Butterfly strategy, 169Short Iron Condor strategy, 173Short Put Butterfly strategy, 155Short Put Condor strategy, 164Short Straddle strategy, 179Short Strangle strategy, 183Short Synthetic Future strategy, 277Straddle strategy, 125Strangle strategy, 131
Strap strategy, 141Strip strategy, 136Synthetic Call strategy, 249Synthetic Put strategy, 253
Mmarket outlookBear Call Ladder strategy, 110Bear Call spread strategy, 33Bear Put Ladder strategy, 115Bear Put spreads, 96Bull Call Ladder strategy, 100Bull Call spreads, 91Bull Put Ladder strategy, 105Bull Put spread strategy, 29Calendar Call strategy, 58, 71Call Ratio Backspread strategy, 220Collar strategy, 242Covered Call strategy, 24Covered Put strategy, 84Covered Short Straddlestrategy, 48Covered Short Stranglestrategy, 53Diagonal Call strategy, 65Diagonal Put strategy, 77Guts strategy, 144Long Box strategy, 288Long Call Butterfly strategy, 189Long Call Condor strategy, 199Long Call Synthetic Straddlestrategy, 255Long Combo strategy, 279Long Iron Butterfly strategy, 38Long Iron Condor strategy, 42Long Put Butterfly strategy, 194Long Put Condor strategy, 204Long Put Synthetic Straddlestrategy, 259Long Synthetic Future strategy, 272Modified Call Butterfly strategy, 209Modified Put Butterfly strategy, 213Put Ratio Backspread strategy, 225Ratio Call Spread strategy, 230Ratio Put Spread strategy, 234Short Call Butterfly strategy, 149
Index
Short Call Condor strategy, 158Short Call Synthetic Straddle strategy, 264Short Call Synthetic strategy, 268Short Combo strategy, 283Short Guts strategy, 185Short Iron Butterfly strategy, 167Short Iron Condor strategy, 171Short Put Butterfly strategy, 153Short Put Condor strategy, 162Short Put strategy, 17Short Straddle strategy, 177Short Strangle strategy, 181Short Synthetic Future strategy, 275Straddle strategy, 123Strangle strategy, 128Strap strategy, 139Strip strategy, 134Synthetic Call strategy, 247Synthetic Put strategy, 251married puts. See Covered Put strategymitigation of lossBear Call Ladder strategy, 113Bear Call spread strategy, 36Bear Put spreads, 98Bull Call Ladder strategy, 103Bull Call spread strategy, 94Bull Put Ladder strategy, 108Bull Put spread strategy, 32Calendar Call strategy, 61Calendar Put strategy, 73Call Ratio Backspread strategy, 223Collar strategy, 245Covered Call strategy, 27Covered Put strategy, 87Covered Short Straddle strategy, 50Covered Short Strangle strategy, 56Diagonal Call strategy, 67Diagonal Put strategy, 79Guts strategy, 147Long Box strategy, 290Long Call Butterfly strategy, 192Long Call Condor strategy, 202Long Call Synthetic Straddlestrategy, 258Long Combo strategy, 282Long Iron Butterfly strategy, 40Long Iron Condor strategy, 45
Long Put Butterfly strategy, 197Long Put Condor strategy, 207Long Put Synthetic Straddle strategy, 262Long Synthetic Future strategy, 274Modified Call Butterfly strategy, 211Modified Put Butterfly strategy, 216Put Ratio Backspread strategy, 228Ratio Call Spread strategy, 232Ratio Put Spread strategy, 237Short Call Butterfly strategy, 151Short Call Condor strategy, 160Short Call Synthetic Straddlestrategy, 266Short Call Synthetic strategy, 270Short Combo strategy, 286Short Guts strategy, 188Short Iron Butterfly strategy, 169Short Iron Condor strategy, 174Short Put Butterfly strategy, 156Short Put Condor, 165Short Straddle strategy, 180Short Strangle strategy, 184Short Synthetic Future strategy, 278Straddle strategy, 126Strangle strategy, 131Strap strategy, 142Strip strategy, 136Synthetic Call strategy, 249Synthetic Put strategy, 253Modified Call Butterfly strategy, 208exiting, 211trading, 208–212Modified Put Butterfly strategy, 212exiting, 216trading, 213–217
Nnaked calls, trading, 9–10naked puts, trading, 16–19net credit transactionsBear Call Ladder strategy, 110Bear Call spread strategy, 34Bull Put Ladder strategy, 105Bull Put spread strategy, 29Call Ratio Backspread strategy, 221Covered Put strategy, 85
343
344
Index
net credit transactions (Contd.)Diagonal Put strategy, 77Long Call Synthetic Straddlestrategy, 256Long Iron Butterfly strategy, 38Long Iron Condor strategy, 43Modified Put Butterfly strategy, 214Put Ratio Backspread strategy, 225Ratio Call Spread strategy, 230Ratio Put Spread strategy, 234Short Call Butterfly strategy, 149Short Call Condor strategy, 158Short Call Synthetic strategy, 268Short Combo strategy, 283Short Guts strategy, 186Short Put Butterfly strategy, 153Short Put Condor strategy, 162Short Straddle strategy, 178Short Strangle strategy, 182Short Synthetic Future strategy, 276Synthetic Put strategy, 251net debit transactionsBear Call Ladder strategy, 110Bear Put Ladder strategy, 115Bear Put spreads, 96Bull Call Ladder strategy, 101Bull Call spreads, 91Bull Put Ladder strategy, 105Calendar Call strategy, 58Calendar Put strategy, 71Collar strategy, 242Covered Call strategy, 25Covered Short Straddle strategy, 48Covered Short Strangle strategy, 53Diagonal Call strategy, 65Guts strategy, 145Long Box strategy, 288Long Call Butterfly strategy, 190Long Call Condor strategy, 199Long Combo strategy, 279Long Put Butterfly strategy, 194Long Put Condor strategy, 204Long Put Synthetic Straddle strategy, 260Long Synthetic Future strategy, 272Modified Call Butterfly strategy, 209Short Call Synthetic Straddlestrategy, 264
Short Iron Butterfly strategy, 167Short Iron Condor strategy, 172Straddle strategy, 123Strangle strategy, 129Strap strategy, 139Strip strategy, 134Synthetic Call strategy, 247neutral (direction) market outlookLong Iron Butterfly strategy, 38Long Iron Condor strategy, 42neutral market outlookLong Call Synthetic Straddlestrategy, 255Long Put Synthetic Straddlestrategy, 259neutral to bearish market outlookBear Call spread strategy, 33Covered Put strategy, 84Ratio Call Spread strategy, 230Strip strategy, 134neutral to bullish market outlookBull Put spread strategy, 29Calendar Call strategy, 58, 71Covered Call strategy, 24Ratio Put Spread strategy, 234Strap strategy, 139novice tradersCovered Call strategy, 23exiting, 27trading, 23–28Synthetic Call strategy, 246exiting, 249trading, 246–250Synthetic Put strategy, 250exiting, 253trading, 251–254
OOffsetting Positions (taxation), 298OTM (Out of the Money), 5Bear Call Ladder strategy, 111Bear Put spreads, 97Bull Call Ladder strategy, 101Bull Call spreads, 92Bull Put Ladder strategy, 106Bull Put spread strategy, 29
Index
Calendar Call strategy, 59Covered Call strategy, 25Covered Put strategy, 83–85Covered Short Strangle strategy, 52–54Diagonal Call strategy, 65Diagonal Put strategy, 76Long Iron Butterfly strategy, 37Long Iron Condor strategy, 42Short Strangle strategy, 184outlook. See market outlook
Ppricesdecline in short call strategy, 10rise in long call strategy, 6strike. See strike priceprofile charts (risk), 1profitBear Call Ladder strategy, 112Bear Call spread strategy, 35Bear Put Ladder strategy, 117Bear Put spreads, 98Bull Call Ladder strategy, 102Bull Call spreads, 93Bull Put Ladder strategy, 107Bull Put spread strategy, 31Calendar Call strategy, 60Calendar Put strategy, 72Call Ratio Backspread strategy, 222Collar strategy, 244Covered Call strategy, 26Covered Put strategy, 86Covered Short Straddle strategy, 50Covered Short Strangle strategy, 55Diagonal Call strategy, 67Diagonal Put strategy, 79Guts strategy, 146Long Box strategy, 290Long Call Butterfly strategy, 192Long Call Condor strategy, 201Long Call Synthetic Straddlestrategy, 257Long Combo strategy, 281Long Iron Butterfly strategy, 40Long Iron Condor strategy, 44Long Put Butterfly strategy, 196
Long Put Condor strategy, 206Long Put Synthetic Straddlestrategy, 261Long Synthetic Future strategy, 274Modified Call Butterfly strategy, 211Modified Put Butterfly strategy, 215Put Ratio Backspread strategy, 227Ratio Call Spread strategy, 232Ratio Put Spread strategy, 236risk profile charts, 1Short Call Butterfly strategy, 151Short Call Condor strategy, 160Short Call Synthetic Straddlestrategy, 265Short Call Synthetic strategy, 270Short Combo strategy, 285Short Guts strategy, 187Short Iron Butterfly strategy, 169Short Iron Condor strategy, 173Short Put Butterfly strategy, 155Short Put Condor strategy, 164Short Straddle strategy, 179Short Strangle strategy, 183Short Synthetic Future strategy, 277sideways strategies. See sidewaysstrategiesStraddle strategy, 125Strangle strategy, 130Strap strategy, 141Strip strategy, 136Synthetic Call strategy, 249Synthetic Put strategy, 253Put Ratio Backspread strategy, 224exiting, 227trading, 225–229putsBear Put Ladder strategy, 114