Options Installment Strategies: Long-Term Spreads for Profiting from Time Decay

Description

An “installment strategy” in its most basic form, combines two options, one long-term position and one short-term. This strategy is designed as a conservative, no-cost method to either eliminate risk for future trading when stock is owned; or to fix the price for a future purchase of the underlying security. Portfolio managers and experienced individual traders face a chronic problem – risk versus time. This goes beyond the well-known time decay of options and expands to the ever-present market risk to an underlying security. How do you execute a successful, conservative strategy and eliminate or reduce market risk? In this book, a range of effective and creative strategies set out a conservative hedging system. This involves the combination of long-term long positions offset by short-term short positions in various configurations. Options Installment Strategies presents variations on the well-known calendar spread and demonstrates how specific strategies work well in short-term swings and even during extended periods of consolidation. Front Matter ....Pages i-xv Chart-Based Trade Timing (Michael C. Thomsett)....Pages 1-14 Proximity and Risk (Michael C. Thomsett)....Pages 15-29 Picking the Right Stock (Michael C. Thomsett)....Pages 31-47 Timing with Well-Selected Technical Signals (Michael C. Thomsett)....Pages 49-65 Long-Term Market Risk Elimination (Michael C. Thomsett)....Pages 67-79 Long-Term Contingent Purchase (Michael C. Thomsett)....Pages 81-92 Short Options and Levels of Risk (Michael C. Thomsett)....Pages 93-105 Alternative Offsets Beyond Short Calls or Short Puts (Michael C. Thomsett)....Pages 107-121 Combining the Short Offset Alternatives (Michael C. Thomsett)....Pages 123-137 Expanding the Strategies (Michael C. Thomsett)....Pages 139-154 Managing Potential Losses (Michael C. Thomsett)....Pages 155-165 Recovery Strategies (Michael C. Thomsett)....Pages 167-173 The Flexibility of Options Hedging (Michael C. Thomsett)....Pages 175-181 Back Matter ....Pages 183-192