Tips for Put Ratio BackSpread Options Trade: Entry & Exit Signals: Options, Futures, Derivatives & Commodity Trading

Tips for Put Ratio BackSpread Options Trade: Entry & Exit Signals


Details about Entry signals and Exit signals for Put Ratio BackSpread Options Trading
Continuing further from our previous article Ratio Put BackSpread Options Profit & Loss Calculations

Entry Signals for Put Ratio BackSpread Options Trade


- An option trader can benefit from Put Ratio BackSpread Options Trade position if he expects the underlying stock to fall.

- One should keep a close eye on the option premiums for each individual option he is buying - a small change in option premium values can make a big difference for this being a net debit or net credit position

- Expiration period should be kept as long as possible - the more time you give the more volatility and hence the more probability of price movement

- Strike prices should be chosen wisely - higher strike can be around ATM, lower should be one to two strike levels lower than high strike

- Pick options on highly liquid stocks for trading this Put Ratio BackSpread Options Trade

Exit Signals for Put Ratio BackSpread Options Trade


- Since this is a net buy position, time decay will hit you - hence exit from the position at max one month to expiry see (Options Time Decay: Explained with Examples)

- Increase in volatility will help you - if you see big price move downwards, keep a trailing stop loss for closing the entire position

Next, Let's continue further to the Greeks for Ratio Put BackSpread Option: Delta, Gamma, Rho, Vega, Theta
Have Comments or Questions? Post them using the "Post Your Comments" link below. Your queries will be responded for free in 24 hrs!

0 Comments: Post your Comments

Wish you all profitable derivatives trading and investing activities with safety! = = Post a Comment

Copyright Information:
© FuturesOptionsETC.com
Please see Our Copy Right Policy. All the articles, posts and other materials on this website/blog are copyrighted to the authors & publishers of this site. The content should NOT to be reproduced on any other website or through other medium, without the author's permission. Contact: contactus(AT)futuresoptionsetc.com

DISCLAIMER: Before using this site, you agree to the Disclaimer. For Any questions or comments, please mail contactus(AT)futuresoptionsetc.com.

About Us Advertise With Us Copyright Policy & Fair Use Guide Privacy Policy Disclaimer