Backspreads, Diagonals and Butterflies - Advanced Strategies
3.6 (88 ratings)
Course Ratings are calculated from individual students’ ratings and a variety of other signals, like age of rating and reliability, to ensure that they reflect course quality fairly and accurately.
1,225 students enrolled

Backspreads, Diagonals and Butterflies - Advanced Strategies

This course combines 3 advanced spreads - Backspreads, Diagonals (and Double diagonals), and Butterfly spreads.
3.6 (88 ratings)
Course Ratings are calculated from individual students’ ratings and a variety of other signals, like age of rating and reliability, to ensure that they reflect course quality fairly and accurately.
1,225 students enrolled
Created by Hari Swaminathan
Last updated 12/2019
English
English [Auto]
Price: $79.99
30-Day Money-Back Guarantee
This course includes
  • 2 hours on-demand video
  • 5 downloadable resources
  • Full lifetime access
  • Access on mobile and TV
  • Certificate of Completion
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What you'll learn
  • Learn about three advanced strategies - Backspreads, Diagonals and Butterfly spreads
  • Learn how the Backspread can be constructed in very creative ways
  • Why the Backspread can be a monthly income strategy and a Volatility strategy at the same time
  • What are the differences between a Calendar spread and a Diagonal
  • Why the Diagonal spread is considered an exotic strategy
  • Learn about the very exciting Butterfly spread
  • What are the best times to trade a Butterfly spread
  • What are the specific applications of a Butterfly spread that can make it a very powerful weapon in your arsenal, especially if you have losing trades
Requirements
  • Options basics, Call and Puts and Vertical spreads
  • Options adjustments and Spread adjustments
  • Calendar spreads (for Diagonals)
  • Credit spreads (for Butterfly spreads)
Description

THIS OPTION SPREADS COURSE COVERS THREE (3) ADVANCED OPTIONS STRATEGIES - BACKSPREADS, DIAGONALS AND BUTTERFLY SPREADS


SECTION I - BACKSPREADS AND RATIO SPREADS


Back Spread and Ratio  Spreads involve putting on an unbalanced amount of Long and Short Options. If  we have more Long Options than Short, the position is called a Back Spread and  if we have more Short Options than Long, the position is called a Ratio Spread.  In a Ratio spread, you have unlimited losses on one side because you have more  Short Options. The Back Spread can be  constructed in many creative ways, and we show you how you can manage different  strike prices as well as different ratios of Long and Short Options to  construct an optimal Back Option Spreads. We don't recommend Ratio spreads as they have an unlimited  loss potential.


What you will master

  • What is the philosophy of Back spreads and Ratio spreads

  • Different creative possibilities with the Back spread

  • How should we look at the Greeks in a Back Spread

  • Importance of understanding the "Valley of death"

  • How should we avoid the valley of death

  • Why is this a Volatility strategy

  • Why do we not recommend a Ratio spread

  • Why is the back Spread a great trade for the busy professional



SECTION II - DIAGONALS AND DOUBLE DIAGONALS 

The Diagonal is a variation of the Calendar time spread, and it tends to reduce the Vega exposure of a Calendar spread. Due to this fact, it also has a Delta bias when the trade is put on. It is important that you understand and become a master at trading Calendar spreads before you try a Diagonal spread. Although the Diagonal has very similar characteristics as a Calendar spread, the Diagonal is a complex variation of the Calendar spread. Just like in Calendars, the easiest adjustment to a Diagonal spread is to convert it into a Double Diagonal on the losing side, and the course covers this adjustment in detail. You will also benefit from a higher Theta decay than in regular Calendars, however the compromise you make is that the risk exposure in higher than a Calendar, and you also have a Delta bias.

What you will master

  • What are Diagonals and how do they differ from Calendars

  • Why are they difficult to adjust

  • What are the normal adjustments for a Diagonal

  • How the double diagonal increases your profit zone and your max profit area

  • Why does Diagonals have better Theta decay than Calendars

  • Why do Diagonals reduce the impact of Vega

  • Why is there a higher risk in Diagonals than Calendars


SECTION III - BUTTERFLY SPREADS

The Butterfly is a low  risk, high reward, and low probability strategy. The Butterfly involves 3  different Options including Long and Short options, so it can be a bit  difficult to manage once its put on. But the Butterfly can produce great  results if it works, and in many cases the cost of the Butterfly is minimal,  and if you're lucky, you may even receive a credit for the Butterfly. Both  these trades are generally put on by hardcore Options traders. The Butterfly  trade should not be your regular "bread and butter" trade in the  sense that you can't rinse and repeat this strategy all the time for consistent  monthly income. But the Butterfly can be an excellent strategy in very specific  circumstances - like protecting the losing side of an Iron condor or a credit  spread. Another great application for the Butterfly is during an earnings  report. Both of these specific applications are covered in detail in this  course of Advanced Options Strategies.


What you will master

  • Why is the Butterfly a low risk, high reward strategy

  • What is the probability of the Butterfly producing fantastic results

  • How do we adjust Butterflies

  • Why the Butterfly is a speculative strategy

  • Why is the Butterfly not a "bread and butter" trade

  • What are the specific instances where a Butterfly can work

  • When does the Butterfly generate its maximum profits

  • How can use Butterfly trades as a hedge to protect our monthly income strategies

Who this course is for:
  • Options traders with all the basic knowledge and want to expand their knowledge of more advanced strategies
Course content
Expand all 11 lectures 01:54:30
+ INTRODUCTION TO BACKSPREADS AND RATIO SPREADS
3 lectures 40:19
The Backspread is a "Volatility" strategy and can benefit from a move in either direction. We explain the base case of the Backspread
Preview 08:32
The strength of the Backspread lies in its ability to be creative and flexible with a number of features - selection of the Long / Short ratio, selection of strike prices and moneyness of the Options, as well as expiry series. In this lecture, the Backspread is dissected in detail for all these variations.
Preview 20:20
The Ratio spread is the reverse of the Backspread. The Ratio spread has more Short Options than Long Options, and so will have an unlimited loss profile on one side. Due to this fact, the applications for a Ratio spread are limited and they have high risk for low reward.
Discussion of the RATIO SPREADS strategy
11:27
+ DIAGONALS AND DOUBLE DIAGONALS
3 lectures 37:07
Explanation of the base case of a Diagonal spread
Discussion on the Diagonal spread
05:32
How is the Diagonal similar to and different from a Calendar spread ? This lecture breaks down the Diagonal spread in detail.
Demonstration of the Diagonal trade
22:35
Another demonstration of the Diagonal spread
Demonstration of the Diagonal spread using Chipotle Mexican Grill (CMG)
09:00
+ BUTTERFLY SPREAD
5 lectures 37:04
Introduction of the Butterfly spread and its construction
Discussion of the Butterfly spread
03:31
Demonstration of the Butterfly spread using the S&P 500 Index (SPX) Options
Demonstration of the Butterfly spread
08:11
The Butterfly spread can be very effective in specific situations. We explain these situations in detail, including how to hedge other positions using the Butterfly spread
Specific application of a Butterfly
13:19
A wrap-up of all the three advanced spreads
CONCLUSION
04:53
Course Quiz
7 questions
BONUS LECTURE - DONT MISS !!
07:10