I’m really having trouble retaining the combinations of different option strategies (Bull spread, bear spread, straddle, etc.) and their payoffs. Has anyone came up with an intuitive way to stay on top of all this? Any techniques or acronyms would be greatly appreciated.
Mark Meldrum did a short seminar video on option strategies which I would highly recommend, really spells things out well.
I would highly suggest knowing options and in my personal opinion the bull/bear spreads are very testable in L2. This is what i used for the exam last year and should help, if you have the basics:
bull: buy low sell high
bear: buy high sell low
straddle: like ‘saddle’ for riding a horse…get ready to ride volatility
strangle: cheaper straddle
Strips: strip down
Straps: strap up
This is helpful! Thanks!
I’ll check that out. Thanks for sharing!
Go with the payoff graphs: I found them much simpler to understand. For shorting something, just flip the graph along the x-axis.
Came across a short video from Fintree on derivative strategy which explains 2-3 basic derivative strategies. Very helpful. Not sure if I am allowed to share link on the forum, hence not sharing it. Would recommend to anyone having tough time with deri strategy