Hughes Optioneering

February 23, 2017

Profiting in Up or Down Markets

By: Chuck Hughes

In this video the Hughes Optioneering Team will explore an option spread strategy that can profit in up or down markets. Call option spreads have a long position and a short position. The long position profits as the underlying stock moves up in price. The short position profits as the underlying stock moves down in price. The short position provides downside protection if the underlying stock declines in price.

The Option Spread Analysis below displays the profit potential for an actual option spread trade that we own for the Utilities ETF.

This analysis reveals the profit potential for the option spread trade assuming various price changes for the Utilities ETF at option expiration from a 7.5% increase in price to a 7.5% decrease in price.

The analysis reveals that if the Utilities ETF remains flat or increases in price at option expiration, we will realize a $316 profit and a 111.3% return. A 5% decline in the Utilities ETF would result in a 114.4% return and a 7.5% decline would result in a 60.1% return.

Learn how to set up these option spread trades that can profit in up, down or flat markets.

 

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Call Option Spread Analysis

 

 

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Futures, stocks, bonds, currency and options trading involves high risks with the potential for substantial losses.

PLEASE READ. Past results are not necessarily indicative to future results. There is a substantial risk of loss trading stocks and options with or without this or any other advertised product, service or system. Also, hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Since the trades have not actually been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.