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.
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.
Very often people start trading options with little understanding of how many different strategies can be used to limit risks and maximize profits. However, traders must first learn how to utilize options. With this in mind, this article aims to speed up the learning process.
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