Hello all - I am new to trading options, and learning little by little about the various strategies of trading options.
I have an idea for a trade, but have a few questions regarding margin requirements and the risk to reward ratio.
here are the details of the trade
the underlying is UVXY last traded at 6.90 at close July 27, 2012
buy to open 100 shares of UVXY @ 6.90
then do a Short Strangle
exp Dec 22 2012 7.0 call / 6.0 put bid = 4.30
How much margin money ( if any ) would be needed to put on this trade assuming that it is a margin account ?
How do you calculate the break even point ?
How do you calculate the risk / reward ratio ?
I have an idea for a trade, but have a few questions regarding margin requirements and the risk to reward ratio.
here are the details of the trade
the underlying is UVXY last traded at 6.90 at close July 27, 2012
buy to open 100 shares of UVXY @ 6.90
then do a Short Strangle
exp Dec 22 2012 7.0 call / 6.0 put bid = 4.30
How much margin money ( if any ) would be needed to put on this trade assuming that it is a margin account ?
How do you calculate the break even point ?
How do you calculate the risk / reward ratio ?