Bull Spreads with Options

Elizabeth,

Thanks for your comments. :)

As I've probably mentioned before, I'm currently studying a Commerce/Economics degree (4 years + 1 for Finance honours) and I've just finished 3rd year. This semester I took a class called "Options, Futures and Other Financial Derivatives" so I thought I'd put some of what I learnt to practice and take a position.

The range of different strategies you can do with options is quite diverse -- bull spreads, bear spreads, calendar spreads, butterfly spreads, diagonal spreads, strips, straps, straddles, and strangles -- anyone who didn't know I was talking options might get the wrong idea about me. ;)

Anyhow, options are quite interesting. By combining options with other options or with shares, it's almost possible to create almost any payoff you like.

Perhaps next I'll try my hand with futures, heh.

- Thomas.

> Thomas, all I can say is, for a first time
> options trader, you are one brave dude!!

> I have never tried a bull spread. The only
> strategy I've tried is a straddle, which for
> those who might be interested in knowing is
> buying a call and a put on the same stock at
> the same strike price and for the same
> expiration dates.

> However, in my case, with my first straddle,
> the darn stock traded sideways for quite a
> long time, so I ended up losing on the put
> and gaining very litttle on the call. The
> strategy was a good one, but I ran out of
> time and had to decide on getting out of the
> better of the two evils.

> Now I just stick with straight calls. I
> might buy a put if there has been some bad
> news after hours, or at the start of the
> trading day. But nowadays, every experienced
> trader is also trying to short the same
> stock, thus driving the puts up, and making
> it harder for the little people like me to
> get in.

> Good luck. Hope you get some feedback to
> your question.

> Eliz.