Explore Your Options by Jay Kaeppel
AN INEXPENSIVE DIRECTIONAL STRATEGY FOR LEVERAGE
I like buying calls and puts for the leverage, but time decay often ends up working against me to the point that I lose money. Is there an inexpensive directional strategy I can use that allows time decay to work in my favor?
Yes, there are several, but due to space constraints lets just focus on one very versatile and robust strategy that most traders are not aware of. It is commonly referred to as an out-of-the-money butterﬂy spread (heretofore OTM ﬂy, for short) ...