*Not available at Wells Fargo Advisors
*The Overlay Trading Strategy utilizes the marginability of an underlying asset and seeks to produce income. This can be a desirable solution for clients with particularly large stock positions that they do not wish to sell in the intermediate or short term. In addition, such an overlay program can be beneficial when traded over many types of portfolios, whether you hold a diversified portfolio, fixed income, or a large single stock position.
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A spread is an options strategy that requires two transactions, usually executed at the same time. You purchase one option and write another option on the same stock. Both options are identical except for one element, such as strike price or expiration date. The most common are vertical spreads, in which one option has a higher strike price than the other. The difference between the higher strike price and the lower strike price is also known as the spread. Different spread strategies are appropriate for different market forecasts.
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The Iron Condor Spread strategy is a neutral strategy. In the Iron Condor, an investor will combine a Bear-Call Credit Spread and a Bull-Put Credit Spread on the underlying security since there are two spreads involved in the strategy (four options), there is an upper break even and a lower break even. A profit is made if the stock remains above the lower break even point or below the upper break even point.
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