There are mainly four type of vertical spread strategies: the bull call spread, the bull put spread, the bear call spread, and the bear put spread. Each of these has you buy one option and sell one option. Credit or Debit Long leg Short leg Bull put Credit Put at lower Put at higher strike …
A spread is an options strategy that requires two transactions, usually executed together. You purchase one option and write another option on the same stock or index. Both options are identical except for one element, such as strike price or expiration date. The most common are vertical spreads, in which one option has a higher strike …
You can hedge your stock positions by going long with puts. Buying puts is a simple strategy that can help protect your assets in a bear market. If you think the market is going to decline, buying puts might be more advantageous than either selling the stocks you own or selling stock short through your …
Writing calls is a straight forward options strategy. When you write a call, you receive cash upfront and, in most cases, hope that the option is never exercised. It can be conservative or risky, depending on whether you’re covered or uncovered. CALCULATING RETURN To calculate the return on a written call, you’ll have to take …
You can profit from an increase in a stock’s price by purchasing a call. Buying calls is popular with options traders, beginners, and experts alike. This is a simple strategy: You buy calls on a stock or other equity whose market price you think will move higher than the strike price plus the premium by …
Selecting a strategy is the first step when trading in options. The second step is finding the security on which to purchase or write an option. INVESTIGATING OPTIONS When choosing a stock to purchase, you most likely look for a company with growth potential or a strong balance sheet. A company whose stock price you …
Before start trading in option (buy or sell) you require a strategy, and before choosing strategy, you need to understand how you want options to work in your portfolio. A particular strategy is successful only if it performs in a way that helps you meet your investment goals. If you expect to increase your income …
Knowing the world of options. Though lots of the terms used to describe buying and selling options are the same terms used to describe other types of investments, some terms are exclusive to options. These terms may some time to understand. but there are essential for understanding options strategies. GREEK Greek are terms that are …
Option prices are never fixed by any stock exchanges or regulator (SEBI) or anybody for that matter. Price discovery is a very critical and basic component of markets. Stock exchanges only provide a platform where buyers and sellers meet, and regulators role is to ensure smooth functioning of our markets. As long as the option is …
Whether you’re hedging, looking for income, or speculating, you can put options to work for your portfolio. Although options may not be suitable for everyone, they’re among the most flexible of investment choices. Depending on the contract, options can protect or enhance the portfolios of many kinds of investors in rising, falling, and neutral markets. …
