Secret 69BEWARE OF ALLIGATOR SPREADS

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With the high costs and difficulty of trading spreads, when

you write complex spreads, such as butterfly spreads, which involve

three trades in and three trades out, you are in deep trouble.

As a result, whenever anyone mentions such spreads, I am

turned off. In the business we call such spreads, alligator

spreads, for the commissions and slippage will eat you alive.

Alligator spreads look great on paper but rarely work out in

actual trading. Avoid any spread that involves three trades to get

in the position, for if you don’t, you will become a prey of the

alligator.

 

With the high costs and difficulty of trading spreads, when

you write complex spreads, such as butterfly spreads, which involve

three trades in and three trades out, you are in deep trouble.

As a result, whenever anyone mentions such spreads, I am

turned off. In the business we call such spreads, alligator

spreads, for the commissions and slippage will eat you alive.

Alligator spreads look great on paper but rarely work out in

actual trading. Avoid any spread that involves three trades to get

in the position, for if you don’t, you will become a prey of the

alligator.