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Creating Covered Options Spreads

Note: When creating CME strategies in the Strategy Creation window using X_TRADER® 7.17.65 or higher, the Strategy Type is dynamically selected based on the legs:
  • When a combination of futures and options make up the legs, the Price and Delta fields become enabled for the futures leg and Covered is displayed as the strategy type.
  • When a strategy is configured for only options, Combo is displayed as the strategy type.

To create a Covered option spread...

  1. Select (the Create Strategy icon) from the X_TRADER Control Panel. This displays the Create Strategy window.

  2. Use Instrument Explorer to compose Leg 1 of the strategy.
  1. Click the Leg 1 Contract field to invoke Instrument Explorer.
  2. Select the market (e.g.,CME) where you would like to create the strategy.
  3. Select OPTION in the Product Type field. This displays options in the Product field.
  4. Select the product (e.g., 6A) in the Product field. This displays all deliverable strike prices in the Instrument field.
  5. Select the desired strike price in the Instrument field.
  6. Click OK to add the instrument to the Creation pane.

  • Use Instrument Explorer to compose Leg 2 of the strategy.
    1. Click the Leg 2 Contract field to invoke Instrument Explorer.
    2. Select the market.
    3. Select FUTURE in the Product Type field. This displays futures products in the Product field.
    4. Select the product (e.g., 6A) in the Product field. This displays all available expiries in the Instrument field.
    5. Select the desired expiry month.
    6. Click OK to add the instrument to the Creation pane.
  • Use the Buy/Sell (B/S) button to declare if you are buying or selling each leg.
  • Use the Quantity field to set up ratio spreads. You may accept the quantity of one (1) or enter a different quantity using the keyboard.
  • Select Covered in the Strategy Type drop-down list. This enables the Price and Delta fields.
  • Type the underlying futures price in the Price field formatted as it displays in X_TRADER and set the Delta.
  • Click the Create button. This submits the strategy to the exchange for validation. Once validated, the strategy displays in the Saved Strategies pane and Market Explorer.