The No Nonsense Guide to Buying and Selling Options: Learn when and why to buy or sell options on futures contracts. by Michael Smith

Author:Michael Smith [Smith, Michael]
Language: eng
Format: mobi
Published: 2014-04-21T23:00:00+00:00

6) You decide that the best strategy for this particular instance is a short strangle. You check the margin requirements and after the premiums are collected they will total $900 per strangle.

7) You like the trade but you remember how volatile natural gas can be so you decide to enter into only 3 short strangles in the April natural gas market. The initial margin requirement is $2,700 plus your commissions and fees. (This meets the less than 5% of your equity rule.)

8) You decide that your loss exit strategy will be to scale out of one option at a time if they move against you by 25% increments. Your profit exit strategy is to simply let the options expire worthless.

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