In today’s Options Jive, Tom and Tony cover management techniques for strategies that have two different profit zones. The guys go over, Big Lizards, and . We like to employ these strategies because of their high , but their various profit zones can be confusing.
We start off by using the put ratio spread to summarize how we like toin ratio spreads. The profit area surrounding the acts like a , and we manage it as such by waiting for 25% of the maximum profit. If the underlying market moves to the upside (or the downside for call ratio spreads), then we try to take the full credit on the trade.
Similar to the ratio spread, Big/Jade Lizards are managed like Straddles/Strangles when the stock price is near the short options’ strike price. And then we look to take the full difference between the credit and the width of thewhen the stock moves to the upside.
Check out the segment above for more numbers and details around managing these more complicated strategies.