I like. However, it doesn’t address risk management, and that is what we do. It would be helpful in that regard if there were some discussion about the positives and negatives of closing the position early (why would one do so, what should one be watching, what action would be appropriate if it begins to appear that the stock is going to end up in either the “green” or the “red” part of the diagram, etc.).
Dan/Gary/Jeff,
Well explained trade but since you did a comparison with a Bull Put Spread and defined the risk of the BCS, it would be helpful to explain the additional risk in the BPS as compared to the BCS. When I first started with optionmarketmentor, I had the naive view that the BPS had a somewhat limited risk but found that when the stock fell through or rapidly approach the BPS box, the deltas could expand at an unequal rate and the true risk was apparent. My broker, Etrade, did notify me once before the expiration date that I could be in deep trouble in coverage if I let the trade expire.
I like. However, it doesn’t address risk management, and that is what we do. It would be helpful in that regard if there were some discussion about the positives and negatives of closing the position early (why would one do so, what should one be watching, what action would be appropriate if it begins to appear that the stock is going to end up in either the “green” or the “red” part of the diagram, etc.).
Dan/Gary/Jeff,
Well explained trade but since you did a comparison with a Bull Put Spread and defined the risk of the BCS, it would be helpful to explain the additional risk in the BPS as compared to the BCS. When I first started with optionmarketmentor, I had the naive view that the BPS had a somewhat limited risk but found that when the stock fell through or rapidly approach the BPS box, the deltas could expand at an unequal rate and the true risk was apparent. My broker, Etrade, did notify me once before the expiration date that I could be in deep trouble in coverage if I let the trade expire.