Ten Options Strategies to Know
Like every other investment, a person looking to jump into trading options is looking to make profits and limit risks which is only possible if your familiarize yourself with the options strategies as your disposal. Trading options, like any other investment comes with its challenges that can lead to massive loss of revenue, which is why as a trader, you should learn the option strategies available to you. There is a lot you can gain from stock options but the key lies in learning and understanding the option strategies available to you. Below are the ten option strategies every investor should know before jumping into trading options.
For an investor having a short-term position on the stock market, covered call is the best option strategy because your premium will not lose value in case of a decline in the underlying stock’s value while still generating income. One way of mitigating risks when venturing into trading options is taking advantage of the Married Put which will ensure you remain in a strong financial position regardless of how sharply the stock’s prices fall.
Any investor should learn about the Bull Call Speed because it will come in handy when they venturing into trading options; this can be yours simplest way of generating income because like with other businesses, you buy at a specific price and sell the same number of calls at a higher price. As an investor, there are occasions when the asset prices will fall resulting in huge losses, however, you can limit the losses by using the Bear Put Strategy.
Another trade option strategy you should know about is the long straddle; this will come in handy when you are expecting the price of an asset to move significantly but you are unsure of the direction it might go; there is the potential for maximum gains with this strategy although the maximum loss is limited to the amount you paid for them. Long strange is an option strategy that will be valuable in those times when you don’t know whether an asset price is will shift to the positive or negative side.
The iron corridor strategy is one of the ten strategies you should know of to maximize gains in trading options; you can use this strategy to get the most of a stock experiencing low volatility in the market, and you will be one among the many people who will be using it. In case you find yourself dealing with a non-volatile stock, Iron Butterfly strategy can come to your aid; you will earn income with this strategy, plus a possibility of a small gain. Ensure you have mastered these option strategies before jumping into trading options.
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