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Strategies & Market Trends : Advanced Option Strategies

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To: Joe Waynick who wrote (11)	7/1/1998 9:09:00 AM
From: Douglas Webb	Read Replies (1) of 355

I'm also trying to understand what Herman Matos calls "Recovery Spreads"... The term comes from the CBOE's pamphlet on the risks of option trading; you probably have a couple of copies lying around with your brokerage statements. It's also available on their website, cboe.com. Basically, the Recovery Spread is just a covered call combined with a Bull Call Spread, where you use the same short call series for both positions. The profit graph looks like a covered call profit graph, but with a steeper curve between the long and short strike prices. You can see examples on my site, webbindustries.com Doug.

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