Trading Options in Turbulent Markets: Master Uncertainty through Active Volatility Management, 2nd Edition

Chapter 21

Wingspreads

Capturing Convergence and Divergence

In options parlance, an albatross, condor, and pterodactyl are otherwise known as “wingspreads” as their expiration date risk/reward profiles resemble that of either a giant seabird, a new world vulture, or even an extinct flying reptile. This likeness may require substantial imagination to picture, but it does add a bit of welcome atmosphere to the otherwise lifeless world of options strategy. However, to be clear, this expiry date risk/reward resemblance to something that flies does serve to offer specific clues on both how and when they should be traded. And, by the end of this chapter, this seemingly complex subject will—with any luck—become somewhat intuitive to you.

When talking ...