When a Heron Meets a Gull

Hedged equity that takes advantage of term structure

Fifty Ways to Trade an Option

I love to brag about how the equity options markets allow you to create whatever risk profile you’re looking for. Between indices, ETFs, and the range of individual equities, there’s a listed option for every exposure, on most types of assets. Be careful of packaging though.

Not a Daiquiri

Once you’ve conquered the selection of a name or basket of tickers, there are thousands of strikes and dozens of expirations for most of the tradable products. How do you pick the right ones? Options investing requires nimble positioning, and there is no best trade for all markets. 

In the series Fifty Ways to Trade an option, we’ll explore a wide range of position types, focusing on their highest and best use cases. You’ll see how the same structure can work in multiple scenarios - pushing and pulling the strikes or splitting a spread across terms. 

Whether it’s a defensive buffer around earnings or short term spread to capture equity pops, you’ll find it here. Follow along each week for a new spread and market opportunity.  

Today, we’ll dig into a spicier flavor of my favorite hedged equity structure. If we take the GULL put spread collar, add in some theta and path risk, you can find yourself with more upside and/or less downside.