Replace Stock with a ZEBRA? | Advanced Options Strategies | Ben Watson | 10-4-24

Advanced Options Strategies | Ben Watson | 10-4-24
Replace Stock with a ZEBRA? | Advanced Options Strategies | Ben Watson | 10-4-24
Characteristics and Risks of Standardized Options. bit.ly/2v9tH6D
In this class, we respond to viewer requests to discuss the ZEBRA (Zero Extrinsic Back RAtio ) spread strategy. We talk about the comparision to long or short stock, long options, and the impacts of time and volatility. Finally, we create illustrative examples using the thinkorswim Desktop paperMoney platform to reinforce the concepts.
You’ve learned the option basics, now it’s time to learn how to combine calls and puts to create different options strategies. Join your education coach to learn ways to trade and manage these complex option strategies:  Iron Condors, Butterflies, Calendars, Straddles, Strangles, and a variety of other multi-leg option strategies. 
1023-3KVR
Options carry a high level of risk and are not suitable for all investors. Certain requirements must be met to trade options through Schwab. Please read the Options Disclosure Document titled "Characteristics and Risks of Standardized Options" before considering any option transaction.
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[@richardjudge2322]

Thank You Ben Watson.

[@tradertalkswebcasts]

Thanks Richard! ^BW

[@JimC-xi8vr]

Thanks, Ben. Really enjoy all your classes every day.

[@tradertalkswebcasts]

Glad you like them! ^BW

[@SunnyCalGal]

Much appreciated! Thank you.

[@tradertalkswebcasts]

Very welcome! ^BW

[@JimC-xi8vr]

Hi Ben, does the Zebra trade generally work best with higher priced stocks, like over $300 - 500+ stocks? Thanks.

[@tradertalkswebcasts]

Generally, traders may see a greater difference and thus capital efficiency with higher price stocks. That said, the performance of the strategy is roughly the same, regardless. It's more dependent on the directional move the stock makes, and sometimes lower priced stocks make greater percentage moves. ^BW

[@tradersden9964]

Is there something we can do to reduce the angle formed when our view goes wrong

[@tradertalkswebcasts]

About the only way to reduce that impact would be to exit sooner, based on the stock making a directional move and perhaps breaking support. ^BW

[@tradersden9964]

@@tradertalkswebcasts thnks for your reply!
Just one more question!
What will be pros and cons if we create these spreads on intraday basis

[@teamtraderusa]

How does ROI compare to single call or put (with delta .75 or more) assuming the same price movement.

[@tradertalkswebcasts]

Absolute ROI may be less, simply because of the cost. But dynamically, the ZEBRA has much less sensitivity to Theta and Vega movement, so may return better performance over time. ^BW