Episode 5 of 'Saxo Options Talk' unveils short call spreads Episode 5 of 'Saxo Options Talk' unveils short call spreads Episode 5 of 'Saxo Options Talk' unveils short call spreads

Episode 5 of 'Saxo Options Talk' unveils short call spreads

Options 10 minutes to read
Koen Hoorelbeke

Options Strategist

Summary:  In Episode 5 of 'Saxo Options Talk,' Koen Hoorelbeke and Peter Siks meticulously dissect the strategy of short call spreads, offering invaluable insights for traders aiming to navigate markets with a bearish to neutral stance.


Introducing Episode 5 - Short Call Spreads

We're excited to bring you Episode 5 of 'Saxo Options Talk', titled "Short Call Spreads." In this episode, hosts Koen Hoorelbeke and Peter Siks delve into the strategic essence of short call spreads, illustrating how this strategy can be a powerful tool in bearish or sideways market conditions.

Decoding short call spreads

Short call spreads may initially appear intricate, but they provide a strategic edge when the markets show bearish or neutral trends. This episode kicks off with a concise recap of long call spreads before navigating the opposite terrain of short call spreads.

Key learning points

  • Strategic application: Delve into why short call spreads are an optimal strategy in certain market scenarios, offering a nuanced understanding of their usage.
  • Maximizing profit and minimizing risk: Gain insight into how to calculate maximum profit, select appropriate strikes, and manage the width of the spread based on your market outlook and risk appetite.

Strategy and selection:

  • Choosing the short strike: Engage with the intricate process of strike selection, balancing between aggressive and conservative approaches, and understanding the trade-offs involved.
  • Selling vs. buying premium: Uncover the advantages of selling premium over buying, and how embracing theta decay can work in your favor.

Advanced insights:

  • The role of volatility: Discuss how implied volatility impacts option pricing and the strategy of capitalizing on high volatility scenarios.
  • Profit and loss tactics: Explore personal strategies for managing profits and losses, the dynamics of early closing, and the nuanced techniques of legging in or legging out of positions.

Practical considerations:

  • Navigating margin and assignment risks: Understand the necessity of margin in short call spreads and how to mitigate the risks associated with assignment, particularly when positions are deeply in the money or when dividends are involved.

Who should listen?

Episode 5 is a must-listen for traders at any level who want to understand the intricacies of short call spreads and how to apply them effectively in their trading strategies.

Subscribe and stay ahead

Ensure you don't miss this insightful episode by subscribing to 'Saxo Options Talk' on Podbean, or on Spotify. Keep yourself updated with the latest strategies and discussions in options trading.

Join the discussion

After tuning in, join me on my Threads profile to share your thoughts and insights on the episode. It's an excellent platform for engaging with fellow traders and enhancing our collective understanding of options strategies.

Your questions, our answers

We're eager to hear from you! Send your options-related questions to optionquestions@saxobank.com. Selected questions will be addressed in future episodes, providing customized advice and insights.

Conclusion:

Episode 5 of 'Saxo Options Talk' is crucial for any trader looking to adeptly maneuver through bearish or neutral markets with short call spreads. With Koen and Peter's comprehensive guidance, you'll be equipped to implement and effectively manage these strategies, enhancing your trading portfolio's performance. Tune in, engage, and enrich your trading expertise with us!


Feedback? Ideas? Suggestions? Let us know.


Previous podcasts:

Related articles:

Previous "What are your options" articles: 

Previous "Investing with options" articles: 

 


Options are complex, high-risk products and require knowledge, investment experience and, in many applications, high risk acceptance. We recommend that before you invest in options, you inform yourself well about the operation and risks. In Saxo Bank's Terms of Use you will find more information on this in the Important Information Options, Futures, Margin and Deficit Procedure. You can also consult the Essential Information Document of the option you want to invest in on Saxo Bank's website.

This article may or may not have been enriched with the support of advanced AI technology, including OpenAI's ChatGPT and/or other similar platforms. The initial setup, research and final proofing are done by the author.

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)

Saxo Markets
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo Markets is a registered Trading Name of Saxo Capital Markets UK Ltd (‘SCML’). SCML is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo Markets assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.

©   since 1992