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. 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. As and investor, you should know the following option strategies.
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. 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.
If you are expecting the price of assets to increase moderately, this is the perfect strategy to use to ensure you are getting the most when trading; you buy calls at a specific strike price and then later them for a higher price, resulting in profits. 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.
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.
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. If you have been considering trading options, these strategies will help you maximize returns and limit risks.