How to trade options and winds formed


The subsident sinking air is relatively dry because as it descends, the temperature increases, but the absolute humidity remains constant, which lowers the relative humidity of the air mass. This warm, dry air is known as a superior air mass and normally resides above a maritime tropical warm and moist air mass.

An increase of temperature with height is known as a temperature inversion. When it occurs within a trade wind regime, it is known as a trade wind inversion. The surface air that flows from these subtropical high-pressure belts toward the Equator is deflected toward the west in both hemispheres by the Coriolis effect.

The trade winds of both hemispheres meet at the doldrums. As they blow across tropical regions, air masses heat up over lower latitudes due to more direct sunlight. Those that develop over land continental are drier and hotter than those that develop over oceans maritime , and travel northward on the western periphery of the subtropical ridge.

The cold phase of the AO leads to weaker trade winds. During mid-summer in the Northern Hemisphere July , the westward-moving trade winds south of the northward-moving subtropical ridge expand northwestward from the Caribbean sea into southeastern North America Florida and Gulf Coast. When dust from the Sahara moving around the southern periphery of the ridge travels over land, rainfall is suppressed and the sky changes from a blue to a white appearance which leads to an increase in red sunsets.

Its presence negatively impacts air quality by adding to the count of airborne particulates. There is a large variability in the dust transport to the Caribbean and Florida from year to year. From Wikipedia, the free encyclopedia. This article is about the weather phenomenon. For other uses, see Tradewind. Age of Discovery , Volta do Mar , and Age of sail. Braham; Enid Pearsons; Deborah M. Random House Webster's College Dictionary second ed.

Historical atlas of the North Pacific Ocean: A text-book of commercial geography. Mcgraw-Hill Book Company, Inc. Archived from the original on Encyclopedia of world climatology. If the stock is not in the center at this point, the strategy will have a bullish or bearish bias.

The put you bought at strike A and the call you bought at strike D serve to reduce your risk over the course of the strategy in case the stock makes a larger-than-expected move in either direction. You should try to establish this strategy for a net credit. So you might choose to run it for a small net debit and make up the cost when you sell the second set of options after front-month expiration.

As expiration of the front-month options approaches, hopefully the stock will be somewhere between strike B and strike C.

These options will have the same expiration as the ones at strike A and strike D. See rolling an option position for more on this concept. This helps guard against unexpected price swings between the close of the market on the expiration date and the open on the following trading day.

The goal at this point is still the same as at the outset—you want the stock price to remain between strike B and C. Ultimately, you want all of the options to expire out-of-the-money and worthless so you can pocket the total credit from running all segments of this strategy.

Some investors consider this to be a nice alternative to simply running a longer-term iron condor, because you can capture the premium for the short options at strike B and C twice. Are you getting the feeling that rolling is a really important concept to understand before you run this play? To run this strategy, you need to know how to manage the risk of early assignment on your short options. Some investors may wish to run this strategy using index options rather than options on individual stocks.

It is possible to approximate your break-even points, but there are too many variables to give an exact formula. The sweet spot is not as straightforward as it is with most other plays. That will jack up the overall time value you receive. However, the closer the stock price is to strike B or C, the more you might lose sleep because there is increased risk of the strategy becoming a loser if it continues to make a bullish or bearish move beyond the short strike.

So running this strategy is a lot easier to manage if the stock stays right between strike B and strike C for the duration of the strategy. Potential profit for this strategy is limited to the net credit received for the sale of the front-month options at strike B and strike C, plus the net credit received for the sale of the second round of options at strike B and strike C, minus the net debit paid for the back-month options at strike A and strike D.

If established for a net credit at initiation of the strategy, risk is limited to strike B minus strike A minus the net credit received. If you are able to sell an additional set of options at strikes B and C, deduct this additional premium from the total risk. If established for a net debit at initiation of the strategy, risk is limited to strike B minus strike A plus the debit paid. Margin requirement is the diagonal call spread requirement or the diagonal put spread requirement whichever is greater.

If established for a net credit, the proceeds may be applied to the initial margin requirement. Keep in mind this requirement is on a per-unit basis. For this strategy, time decay is your friend. Ideally, you want all of the options to expire worthless. That way, you will receive more premium for the sale of the additional options at strike B and strike C. After front-month expiration, the effect of implied volatility depends on where the stock is relative to your strike prices.

If the stock is near or between strikes B and C, you want volatility to decrease.