The call backspread strategy - a relatively aggressive trading strategy - is often used by risky investors who believe in significantly rising prices in the near future. Although the call backspread strategy is very similar to the trend-following strategy, there are significant differences:
- With their trading, investors use the trend of underlyings.
- Investors do not apply the call backspread strategy in falling markets.
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The investor sells call options at a lower exercise price, while at the same time buying a larger number of call options with a higher exercise price visit this page over but with the same maturity. The investor refrains from additional hedging on the call backspread strategy for two reasons:
- He believes in a significant price rise.
- A certain hedge in the event of a setback or a trend reversal has already been integrated through the sale of the options anyway.
If the investor's his check expectations meet rising prices, he can continue the call backspread strategy almost indefinitely as long as the trend continues. However, it must take care to spread the exercise prices of the options so that they can reach the profit zone quickly.
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Can the call backspread strategy be implemented in the long term?
If the expectations of the investor she their explanation are met and the underlying asset experiences a rapid increase in value, the call backspread strategy can in principle be applied as long as the trend continues. For example, it can start with options that are out-of-the-money and are therefore relatively cheap. that site them In this case, the sole risk to the investor is that the exercise price is reached during the term of the options. This is not only a good knowledge of the market, but also a good fingertip feeling as well as a portion of happiness required.
The switch from the callbackspread to another strategy is especially recommended for investors who want to secure their high profits, which they see here now time can realize in the initial phase - for example following a trend reversal - and still want to speculate further. They also reduce the risk of being surprised by the possibility of a new trend reversal at any time, and in this case at least some of the profits are secured.
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Where what click here to find out more is the callbackspread strategy particularly worthwhile?
If the investor gets the right time to get started, the call backspread strategy is particularly worthwhile in strongly fluctuating, cyclical values. This applies both to the equity and commodity markets, and to a lesser extent to currency pairs. For example, an economic recovery in a larger economic area such as the eurozone will almost necessarily lead to a rise in commodity prices and the visit site how values of certain equities after a downturn.
Before the investor enters the trading with the call backspread strategy, however, he should thoroughly analyze the market environment. Not only the economic key data play a role, but also political decisions