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Steve Lentz and Jim Graham
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Options Strategy Lab: Trading seasonal patterns with spreads
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FOT-August 2008-6
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Detailed Description
A previous Options Lab compared credit and debit spreads that were designed to take advantage of this pattern; both strategies were profitable (see "The May-October effect," Options Trader, July 2006). This system updates the original test and breaks down its performance year-by-year to find out which type of vertical spread is preferable. Originally, buying debit spreads was the clear winner, but was that a fluke?
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