Episode 7 of 'Saxo Options Talk': the strategy of put spreads

Introducing episode 7 -the strategy of put spreads

The seventh episode of 'Saxo Options Talk', titled "The Strategy of Put Spreads," sees hosts Koen Hoorelbeke and Peter Siks dissecting put spreads in depth. This episode is geared toward equipping traders with the knowledge to utilize long and short put spreads effectively, whether to express a bearish view or as a precise hedging technique.

Demystifying Put Spreads

Put spreads, encompassing both long and short positions, offer traders a spectrum of strategic options. This episode provides insight into the mechanics of put spreads and contrasts them with naked puts, outlining the clear advantages and defined risk profiles of these strategies.

Key Learning Points

• Advantages of Put Spreads: Explore the defined nature of put spreads, how they can cap risks, and why they are a preferred strategy over naked puts, especially in avoiding margin calls and unexpected market moves.
• Strike Selection Strategy: Get to grips with how to choose the right strike prices for put spreads, aligning your positions with your market outlook and the interplay between probability and cost.

Strategic and Selection Insights:

• Optimizing Put Spreads: Understand the balance between being a premium buyer or seller, and the effects of volatility and time decay on these positions.
• Risk and Reward Tactics: Learn how to set profit targets and manage risks within put spread positions, taking into account the maximum loss benefits compared to using stop-loss orders.

Advanced Insights:

• Volatility's Influence: Analyze how implied volatility, when higher than historical volatility, can impact put spread strategies, especially during key market events.
• Risk Management in Action: Uncover strategies for managing positions through earnings announcements and other volatility-influencing events.

Practical Considerations:

• Margin and Assignment in Put Spreads: Discuss the necessity of margin for short put spreads and the implications of deep in-the-money positions and dividend payouts on assignment risk.

Who Should Listen?

This episode is a valuable listen for all traders, whether you're looking to initiate your first put spread or you're seeking to refine an existing strategy with enhanced risk management techniques.

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Your questions, our answers

We're eager to hear from you! Send your options-related questions to optionquestions@saxobank.com. Selected questions will be addressed in future episodes, providing customized advice and insights.

Conclusion:

Episode 7 of 'Saxo Options Talk' is essential for any trader looking to navigate the markets with put spreads. Whether employing them for bearish bets or as part of a broader hedging strategy, Koen and Peter's insights ensure you're well-equipped to implement these strategies effectively. Tune in to sharpen your trading skills and strategy execution with us!