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Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: md1derful who wrote (6787)	8/18/1998 12:13:00 PM
From: MGV	Read Replies (1) \| Respond to of 22640

Did someone say "diagonal spread?" 1. A diagonal spread is one variation of a spread option trading strategy. 2. The spread strategy involves buying 2 or more options of the same type. Example - 2 or more calls or 2 or more puts. 3. The diagonal spread variety involves calls or puts of both (a) different strike prices AND (b) different expirations. 4. The purpose of the spread is to allow a trader to tailor a trading strategy to more precisely fit his view of the market in the underlying equity security. For example, if the trader beleives the underlying will move in a relatively narrow range (short volatility) he can craft a trade with options to allow him to profit IF the equity (for example) trades bewteen 91 and 97 but takes a small loss if it violates the range in either direction.