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. 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. As and investor, you should know the following option strategies.
As a potential trading options investor looking to make the most out of his or her investment, covered call is the first option strategy you should know because it will help you generate income while reducing risks, especially if you are planning to have a short-term position in the stock. Married Put which is perfect for protecting downside risk when holding a stock is another strategy you should know about; this strategy is meant to protect you in case the price of stock falls sharply which can be any time.
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.