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stutz7

01/11/14 2:13 PM

#18162 RE: CortesInvestments #18161

Yes you need level 3 or higher... Involves selling a put of one strike and buying a put of another... Same for calls... You hope the expensive put/call expires worthless while the less expensive strike is a hedge against infinite losses (calls can incur infinite losses) (selling puts losses is limited to the underlying equity price)