The calendar spread is one of the most interesting option strategies.
The butterfly spread reacts differently to changes in implied volatility, depending on the price level on the volatility smile graph.
The gamma of Butterfly spread shows accelerations and decelerations in changes of its value. We saw in Butterfly: Sensitivity to Delta Variations that the butterfly gains and loses value on both sides of its center.
Butterfly spread has certain characteristics that depend on sensitivity to price variations in the underlying asset, its delta ∆.
Butterfly spread is a "classic" options strategy, which combines the simultaneous purchase and sale of three options with three different strikes.
Binary option - is an option, with two possible outcomes of trading: profit or complete loss. At the time of buying an option, the trader makes a prediction (in other words, a bet) on how the price of the asset will change: fall or rise. If the prediction is correct, then the option will bring profit, and if not, then, accordingly, the loss.
Delta hedging is a method of hedging options against fluctuations in the price of the underlying asset. Delta hedging allows you to earn through rehedging if gamma and vega are positive.
Investing your capital in binary options trading requires strategies that have been developed in advance. Professional traders seek to develop strategies to maximize the likelihood of success and the level of profitability, while minimizing potential losses and the likelihood of those losses.
Inexperienced traders tend to ignore the volatility when building an option position. To understand the relationship between volatility and most option strategies, it is important to read the vega in more detail.
Option strategy risk reversal is designed to trade the volatility skew and is formed by buying OTM put option and selling OTM call option. This strategy protects investor from a fall in the price of th