- Great Option Trading Strategies
- Options Trading Strategies (2020): The Most Complete Guide
- 10 Options Strategies to Know - Investopedia
Long puts are the same strategy but for selling the option. If a trader is fairly certain that an option will lose value sometime in the short term, buying a long term sell option helps to give the option time to run out its uptick trend and mature under the strike rate.
Great Option Trading Strategies
Investors can also use a covered call to receive a better sell price for a stock, selling calls at an attractive higher strike price, at which they’d be happy to sell the stock. For example, with XYZ stock at $55, an investor could sell a call with a $65 strike price for $7, then:
Options Trading Strategies (2020): The Most Complete Guide
Sometimes investors use a short put to bet on a stock’s appreciation, especially since the trade requires no immediate outlay. But the strategy’s upside is capped, unlike a long call, and it retains more substantial downside if the stock falls.
10 Options Strategies to Know - Investopedia
Option strategies aren’t mutually exclusive in fact most traders either knowingly or inadvertently deploy them in overlapping fashion to attain more than just a specific set of goals and objectives.
In contrast with a naked call, an investor with a covered call owns the underlying stock or assets on which the call option contract is written. As a result, the long position in the underlying stock provides a “cover” since the shares can be delivered to the buyer in case they decide to exercise their option.
Options trading strategies are blueprints to help investors both protect their investments and maximize their chances of success. They provide investors with lots of flexibility to enable them to configure investments in a way and manner that will benefit them the most.
However, more complex combinations of options and spread strategies have arisen to address a wider range of market scenarios and investor needs based on market outlook, volatility, capital gains, and income imperatives.
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In order to limit these losses, and avoid the naked call scenario, investors usually execute a short call while simultaneously owning the underlying security. This is known as a covered call and we’ll cover this later under protective option strategies.