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DownloadPut/Call Parity by Alex Mendoza
Hidden Risks Of Debit Spread by Alex Mendoza
ARTICLE SYNOPSIS ...Hidden Risks Of Debit Spread by Alex Mendoza Understand all your risks when you trade. Strategies that seem harmless could end up costing you. Debit spreads are a favorite strategy among experienced options traders who understand the need to hedge risk, however strong their directional convictions. For example, if the price of the underlying instrument rises, instead of profiting from a simple call, you can hedge the risk of the total cost of the option by selling another call at a higher strike price. This would lower the cost basis of your trade. The tradeoff for the lower risk is that pro...
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