Guidelines for Option Strategies for use with OSCC charts

With examples for "Normalized "Max Premium"" charts!

Debit transactions   Credit transactions

Listed below are various option strategies. We have grouped them in various categories as to whether they are net debit or credit investments. With sub headings as to whether you and your broker agree to be bullish or bearish on the future. These are only suggestions as strategies to consider. Your broker may have other suggestions. Only your broker can advise you as to the best one to choose.

We do not cover all option strategies here, only the basic ones to educate users on how to apply our charts to basic strategies. The spreads shown are balanced. That is, they have an equal number of long and short positions. Ratio strategies are simply one of the below spreads with extra long or short options. Some of these strategies in combination with the future are referred to as covered strategies. Butterflies are combinations of the below spreads and must be explained by a broker.

Liquidity and Risk

Do not forget that an important part of option strategies is the liquidity of the option contract and it's Relative Risk. For links to Exchange volumes see Volume. For risk analysis see Risk Ranking.

Variance

It is also important to how much you can expect the "Max Premium" and the Future to change.

Definitions

   Vertical Spread - This is where the options are all in the same contract month.
   Horizontal Spread -.This is where the same strike price is used but in different contract months.
   Diagonal Spread - This is a horizontal spread, but with different strike prices.
   Calendar Spread is just a different name for horizontal and diagonal spreads. These can be either forward or reverse spreads.
   The following spreads can be any of the above and can be either in the money, out-out of the money or one side in and the other out. The exact construction of the strategy depends on too many factors to be covered here. Consult your broker.
   The examples below are just to give you and your broker an idea as to how to use our charts to select the strategy that will reduce losses as much as possible and enhance profits as much as possible. If you need a brokers help See Our OSCC Master Broker list of brokers who understand how to use our unique charts.

Debit transactions

   Bullish on the future
      Long Call
      Bull Call Spread
          Long a low strike price call and short a higher strike price call.
   Bearish on the future
      Long Put       
      Bear Put Spread  3-D chart example
          Long a high strike price put and short a lower strike price put.
   Future unstable - Large movement expected
       Long straddle
            Long Call and Long Put
   Example of chart to use.
        In these cases you are looking for the contracts to have a lower value compared to other contracts for this future in the same time frame for the  OSCC ""Max Premium"" value.
This would be the Live Cattle Jun contract between 7/15/2000 and 12/4/2000.
Another example would be the Japanese Yen Mar Contract between 12/4/1999 and  3/25/2000

Credit transactions

**** Credit transactions should only be done with the advise of a qualified broker!****
   Bullish on the future
      Short Put
      Bull Put Spread
          Long a low strike price put and short a higher strike price Put.
   Bearish on the future
      Short Call       
      Bear Call Spread
          Long a high strike price Call and short a lower strike price Call.
   Future stable -  Little movement expected
       Short straddle
            Short Call and Short Put
   Example of chart to use.
        In these cases you are looking for the contracts to have a higher value compared to other contracts for this future in the same time frame for the OSCC ""Max Premium"" value.
This would be the Live Cattle Dec contract between 8/14/1999 and 12/4/1999.  
Another example would be the Japanese Yen Dec Contract between 3/25/2000 and  7/15/2000

We also have a new "chart explanation page" to help explain what these charts show and how to use them.
For a better understanding of what we do please read these pages.
--- About Us What we found that prompted us to develop our option program.
--- The OSCC overview of option trading.
--- The OSCC Option Model.
--- Products
--- The Accuracy of the OSCC Option Model.

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