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9/30/19: Portfolio Analysis - Adjusting our SBUX Ratio Spread into a Straddle

From Theory To Practice

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Today, we spend the lion’s share of our portfolio analysis on SBUX. With the stock falling, our Put Ratio Spread is clearly not working, so we look to close out of the Long Put Vertical Spread that is “hidden” within the Ratio Spread, and then adjust the strategy by adding a Short Call at the same strike as our Short Put, thus creating a Short Straddle. This process highlights one of the great benefits to Ratio Spreads, namely their flexibility.

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