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.
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. 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.
A long saddle options strategy will occur if you decide to buy both call and put options on the same underlying asset with the same strike price but you believe the price will change significantly, you just cannot tell in which direction, opening up a chance of unlimited gains as well as significant losses. As a prospective investor in the trading of options, you should know that strangles are usually more affordable compared to straddles but is beneficial if you cannot tell the direction the change massive change you are expecting will take.
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. These are the options strategies you should know of.