|  OCT 1989

Christmas tree spread - the all-purpose strategy by Jerry Kopf

When a football team breaks from the huddle, the players set up at the line of scrimmage in a formation. Usually, it's the I or T formation. As the center snaps the ball, each player knows exactly what to do. There is no guesswork, no deciding at the line. Gaining a first and 10 depends on how well each play is executed. Investors who expect to profit from put and call strategies should apply this strict football discipline to option trading. The most versatile strategy that offers the average retail trader a structured approach to trading options is a type of spread knows as the Christmas tree. Rather than taking shots willy-nilly, the Christmas tree forces a trader to be disciplined and mechanical in implementing a predetermined strategy on a monthly basis, about five weeks before expiration.

by Jerry Kopf