Reader S. V. raises an interesting question:
I am working on scenarios to trade the contra-ultra
indexes like SDS to take advantage of either a combo spread (selling
puts and buying call) or another method to take advantage of price
movements while reducing risk. Any thoughts?
Interesting idea. These Ultrashort ETFs have really gained in
popularity and most of them (like SDS, DXD, QID) now have enough volume
to make them decent trading vehicles. The actual stock, that is. The
options are another story.
- A big difference here is the lack of volume. In the case of SDS,
the open interest in the July ATM puts is listed in the hundreds - not
thousands - of contracts, versus...
To read the rest of this article, visit our options trading blog...