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How to get started
Derivatives are extremely multi-faceted.
Entering a specialized trade like a butterlfy is dangerous if the trades doesn't have a full understanding of:
every greek and their interaction;
the way volatility is skewed;
the way the skew develops in a normal market, and
how it can effect you when 'shit hits the fan'.
The question about Puts and calls is relevant, but it might indicate that you are at the beginning of your journey into derivatives.
Trading small is essential, but my definition of small and yours can be different. I mean very,very, very small.
And for sure the RUT would not be my first choice. The RUT is a big instrument.
The first step in learning this stuff is to go to the CBOE website. They have tons of free educational webex'es. Those will keep you easily busy for several months. A 2nd step would be deciding if you want a coach/mentor. I had one; personally I would not have survived without, but that is a personal choice. The 3rd step is trading a lot with very small size for 1 to 2 yrs.
We learn by making errors, by evaluation the errors and moving on. If you size doesn't allow you to move on after the error, you throw the baby out with the water. If you can't move on, then the error has become really expensive.
To answer the Put/Call question; when it comes to time-spreads (calendars) there is no difference between calls and puts. The have the same risk graph at T0 and at expiration.
Ernst
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