Speculating in vertical spreads by Bradley J. Horn
ARTICLE SYNOPSIS ...Speculating in vertical spreads by Bradley J. Horn
Many gasoline traders are familiar with the fundamentals of spread trading with New York Mercantile Exchange (NYMEX) energy futures. Far fewer, however, are able to recognize opportunities in option spreads, for good reason: The trader entering an options market for the first time may find himself subject to ""contract shock,"" for unlike the futures trader, whose spread choices are limited to 15 contracts, the options trader must deal with a bewildering assortment of contracts, each with its own price dynamics.
Spread traders will find that...