Trading Support
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Dutch
Trading Support is a new
company with much experience in trading options.
After a period of thorough research en development,
we offer you a service for trading option-spreads
on S&P500 and Nasdaq-100. We generally use
so-called ‘credit-spreads’.
What is a credit-spread?
A credit-spread: the trader
buys and sells simultaneously out-of-the-money
call- or put-options with different strike prices,
but of the same month. The sold options have always
a higher strikeprice than de bought options. This
difference is the premium you get, and that is also
the maximum profit. The maximum loss is the difference between the two
strikeprices in points, subtracted by the premium
received.
A credit-spread is a way of
trading covered options. Please, read the example
on the page: ‘Credit
spreads’.
Market moves
This strategy is particularly
suitable for anticipating on sudden market moves.
These movements occurs often after a news release.
Examples: disappointing economic figures, terrorist
attacks, scandals or businessfraude, tornadoes and
other disasters... This all causes great volatility
on the financial markets. The quick spreading of
the news and a great correlation between the
economic zones is one of the reasons for this to
happen.
Credit-spreads can give a
certain protection for all of this. The maximum
risk is determined when taking a position. The
profit which is also calculated beforehand, can
give an advantage to writing uncovered options.
Using uncovered options writing is also possible,
but the risks are higher.
In a volatile situation it is
difficult to get the right price for you option
position, sometimes. Situations when this happens
occur more often than expected: the market crash
of 1987, Asia crises in the ninenties,
nine-eleven-attack 2001, business-fraude: Enron and
more recent, hurricanes of 2005 in the United
States. 2007: a sudden drop of the markets after a
‘mini-crash’ in Asia.
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