V.15:1 (41-50): Straddles, Strangles And Spreads by Richard M. Koff

Straddles, Strangles And Spreads by Richard M. Koff

Here's a primer for the new trader who wants to move beyond simple buy-and-hold strategies.

Options provide such a bewildering variety of risky and complicated investment choices that most small investors avoid them. You can trade options on stocks, commodities and several indices, such as the Standard & Poor’s 500 or the Standard & Poor’s 100. Index options, in particular, offer several important advantages. Unlike commodity options, you never have to worry about accepting delivery of the underlying commodity or even closing out a position before expiration, because all that is taken care of by the clearing house. Further, if you trade the S&P 100 index option (OEX), you don’t have to open an account with a broker specializing in options because the OEX is traded by stock brokers.