This question is special for Fidelity and opening a credit spread. I currently have Level 3 options that have access to trading, and Fidelity tells me I can do chokes, combinations, and spreads. The general theory is that spreads do not move significantly in the treatment of futures because they are not directed. Instead, they usually act in the same order. Working with Les Futures, the spread of Pascal`s triangle properties develops a natural protective composition. The Collar Spread, also known as “closing”, is the simultaneous purchase of an out-of-the-money-put and the sale of an out-of-the-money hedging call. Under normal circumstances, the Protective Put and the Covered Call, consisting of the necklace, have the same expiration dates, but have different exercise prices. A hedged call is sold on a stock basis against the underlying stock. For example, for XYZ shares currently traded at $50, buying 100 shares of XYZ, selling an XYZ 55 call, and buying an XYZ 45-puts a necklace.
The trader is protected if the stock falls below the exercise price of the put, and loses all gains if the stock rises above the exercise price of the call. Traders who are moderately bulldozers on an underlying stock, but do not have strong conviction, often use collar spreads. The exercise price of the call determines the degree of bullishness of the strategy. The more money is called, the more the strategy becomes bulldozer. Level 2* – level 1, plus purchases of calls and puts (index of shares, indices, currencies and interest rates), writing cash covered puts and buying straddles or combinations (stocks, index, currency and interest rate index). Note that clients admitted to trading option securities on pension accounts are considered approved for Level 2. These IRS rules imply that many different strategies are prohibited. For example, pre-call spreads, VIX calendar spreads, and short combos are not appropriate trades in red IRAs, as they all involve the use of margins. Retirement investors should avoid these strategies even if they were allowed in all cases, as they are clearly geared towards speculation and not savings. scs.fidelity.com/webxpress/help/topics/learn_option_summary.shtml#levels box spreads can also be used in futures tradingA futures contract is an agreement to buy or sell an underlying at a later date at a predetermined price….