Comments on: BACKSPREAD : Strategy for large moves

By: Goldman Sachs| GS| Backspread|A Potentially Profitable Opportunity via Option Trading|

Mon, 03 May 2010 07:19:23 +0000

[...] you read further, I suggest reading about backspread so you are familiar with this wonderful [...]

By: Alcoa (AA) Earnings, An Idea How to Play — OptionPundit

Alcoa (AA) Earnings, An Idea How to Play — OptionPundit — Tue, 07 Apr 2009 17:35:24 +0000

[...] I mentioned about a beautiful strategy to play large moves, called “Backspread” strategy. Here is a Trade [...]

By: OptionPundit | How to Play VISA earnings?

OptionPundit | How to Play VISA earnings? — Mon, 28 Apr 2008 08:22:21 +0000

[...] forget the mighty backspread as well which (depending upon your views of the VISA (V) movement) may be even a superior play. If [...]

By: OptionPundit

OptionPundit — Sun, 30 Dec 2007 06:11:39 +0000

Ken, it’s not necessary that 1:2 ratio will always result in a debit spread. It depends of few parameters. Two parameters worth noticing are 1) Time to expiration and 2) Strike price. IV skew is another one to lookout for.

If you open a backspread just one or two days before expiration, that OOM options will be cheap compared to ITM. So You could sell ITM and buy 2 OOM but still have credit left.

Do little more simulations and I am sure it will reveal more insights about backspread.

By: Ken

Ken — Mon, 24 Dec 2007 19:40:15 +0000

I have tried the same for backspread as you have demonstrated but it turn out to be
Debit Backspread instead of Credit. The ratio of 1:2(short x1, longx 2) will always
turn out to be debit.Can you please advise.

By: Expect a turbulent Week | OptionPundit

Expect a turbulent Week | OptionPundit — Tue, 12 Jun 2007 07:01:17 +0000

[...] Mighty financials/brokers (LEH, GS, BSC) are announcing this week which pretty much set the pace for brokers index. Look out for it and see if you would like to play earnings. One strategy for fairly large moves is backspread that I had covered extensively earlier. Check this out. [...]

By: How to play GOOG Earnings : Part-3 at OptionPundit

How to play GOOG Earnings : Part-3 at OptionPundit — Thu, 01 Feb 2007 11:52:58 +0000

[...] If you would like to know about backspread, please click here Backspread [...]

By: optionpundit

optionpundit — Wed, 24 Jan 2007 01:30:03 +0000

Hi Hussein,

Please look at the post carefully. I didn’t short the 100 calls, I actually bought those. I shorted 95s instead and the funds generated from that was used to purchase 100s.

I didn’t buy 100s back. I decided to let those be expired worthless and not spend money in commissions.