Ten Options Strategies to Know
For a trader considering venturing into trading options, there are options strategies you should know to ensure you are maximizing the returns on your investment. When you take the time to learn about them, you will realize there are so many you can use to your advantage to maximize returns and limit the risks you usually face. Before making trading options your next investment, you should ensure you have everything you need to get the most out of it, hence understanding option strategies. Below are the ten option strategies every investor should know before jumping into trading options.
Covered call is the first option strategy you should know about; for an investor who is not looking to stay alone on the stock for long, this is the perfect strategy because it also generates income while reducing the risks you face. As an investor looking to maximize the return when trading options, Married Put is one of the option strategies you should know; this involves buying both shares and outs of an equivalent number to protect yourself in case price falls sharply.
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. Unlike the Bull Call Speed strategy, the Bear Put Spread is normally used when an investor is expecting asset prices to decline which is why you should master it, but instead of buying calls, you are buying puts at a specific price and selling for lower strike price.
As a potential trading options investor long straddle is one of the most important strategies you should familiarize yourself with because it opens up the possibility of unlimited gains as well as significant losses too. Long strangle is an options strategy that is almost similar to long straddle, with asset price expected to experience a very large movement in either direction but it involve buying out-of-the-money call and put options.
As a trading options investor iron corridor options strategy is one of the things you should master because there is always the potential that you will earn a small amount of premium. With the Iron Butterfly strategy, profits and losses are both limited within a specific range but you can generate income and a higher probability of a small gain with non-volatile stock. Ensure you have mastered these option strategies before jumping into trading options.
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