O'Reilly logo

Options Trading for the Institutional Investor: Managing Risk in Financial Institutions by Michael C. Thomsett

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

11. Combination Conservative Techniques

The most impressive returns available using options involve combination strategies: spreads and straddles. With short straddles, you can achieve higher-than-average current returns. However, when utilizing these more advanced strategies, you need to remember two important points. First, the complex tax rules for such positions could jeopardize your long-term capital gains status. Second, the risks involved are conservative only when the basic assumptions continue to apply. These assumptions include your willingness to acquire more shares of stock and to accept exercise if it occurs, and your continued belief that the fundamental value of the underlying companies remains strong.

Options traders employ a ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required