Leveraged Strategies

By leveraged strategies, we mean the ratio backspreads and ratio spreads. These are strategies where your profits (or losses) are increasingly leveraged because of the different number of options you’re buying or selling as part of the strategy. The ratio backspreads involve buying more options than selling, so there is uncapped upside at an accelerated […]

Call Ratio Backspread

  The Call Ratio Backspread strategy enables us to make accelerated profits provided that the stock moves sharply upwards. Increasing volatility is very helpful because we’re net long in calls. The worst thing that can happen is that the stock doesn’t move at all, and even a sharp move down can be profitable, or at […]

bull put spread strategy

The Bull Put spread is an intermediate strategy that can be profitable for stocks that are either range bound or rising. The concept is to protect the downside of a Naked Put by buying a lower strike put to insure the one you sold. Both put strikes should be lower than the current stock price […]

Short Call Butterfly

The Short Call Butterfly is another volatility strategy and is the opposite of a Long Call Butterfly, which is a range bound strategy. The reason that short butterflies aren’t particularly popular is because even though they produce a net credit, they offer very small returns compared to straddles and strangles with only slightly less risk. […]

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