Timeline for On P and L of backspread
Current License: CC BY-SA 4.0
7 events
| when toggle format | what | by | license | comment | |
|---|---|---|---|---|---|
| Aug 13, 2021 at 9:12 | comment | added | nbbo2 | Some people who predict a crash buy backspreads with the idea that when the crash happens and IV soars they will sell the position for a juicy profit (due both to lower S and higher IV). If they sell too late the profits will be somewhat reduced as IV normalizes. | |
| Aug 8, 2021 at 6:13 | comment | added | user123124 | @noob2 what does this imply? | |
| Aug 8, 2021 at 6:11 | vote | accept | user123124 | ||
| Jul 6, 2021 at 1:07 | comment | added | nbbo2 | A backspread has usually (or always?) a positive Vega, so it profits from increases in IV during its life (before it expires). However you cannot analyze this by looking at the payoff diagram at expiration, at that time IV no longer matters. | |
| Jul 5, 2021 at 22:56 | history | edited | AKdemy | CC BY-SA 4.0 |
deleted 20 characters in body
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| Jul 5, 2021 at 21:20 | history | edited | AKdemy | CC BY-SA 4.0 |
added 329 characters in body
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| Jul 5, 2021 at 20:57 | history | answered | AKdemy | CC BY-SA 4.0 |