Hi guys,
in chapter 29, they make reference to put spreads which are pretty much buying a put and selling a deeper put. In chapter 30, they introduce this exact same method but name it the bear spread.
Are those two strategies identical and there’s a lack of continuity in the curriculum or is there a difference between the two that I’m missing?
thanks!
curriculum is written by putting together articles by different people.
you see reference to strangle, straddle, covered calls in the chapter on Low Basis stock (new reading), currency management (new) and also derivatives - as well…
Sorry for correcting you cpk123, but low basis stock was dropped and replaced by concetrated positions. Just to eliminate confusion.
Put spread involves two puts. When you think that market is going down, you put on a spread buy higher x put and sell lower so you can get premium to reduce the cost of the put. This called bear put spread. Usually put gives you protection against markets declining. So bear spread is one type of put spread. In both the readings, they are saying the same thing.
Hope this helps.
Just an fyi. Straddle and strangle are a little different as the straddle uses at-the-money options while the strangle uses far out of the money options. The result is lower cost and lower return on the strangle.