The Volatility Edge in Options Trading: New Technical Strategies for Investing in Unstable Markets

6. Managing Complex Positions

The preceding chapter began with single-sided trades composed of either puts or calls. As we progressed up the complexity scale, we encountered more complicated positions that contained both. We ended that chapter with a focus on trades built of long and short components—covered calls/puts and synthetic stock. This chapter continues the trend, opening with calendar spreads—which include long and short components with different expiration dates. The chapter then progresses to ratios, calendar spread ratios, and finally trades with three or more components.

This approach was chosen because it fits well with our theme of dynamic management. The simplest trades to manage consist of long or short puts or calls. Managing ...