Did you know these top 10 options trading strategies?


The Forex is an over-the-counter market for the interchange of currencies and there are three-forex market: spot, forward, and future forex market. The foreign exchange market is a huge hub of buyers and sellers, where they transfer their currencies with each other at a decided price. This market regulates foreign exchange rates for all the currencies dealing in the world. It is the source for individuals, companies, and central banks exchange their currencies to cover all aspects of buying and selling at current or determined prices

  

 

“One, who knows how to employ one’s money with the implications of right strategies, can eagerly and readily generate the earnings out of it.”

   

 

 

1.    Covered call options strategy:

 

It is a stock option trading strategy that comprises of (selling) a call option in contradiction of the same asset that you presently have an extended position on. This strategy covers a call option for your present status as it considers that you can provide the essential share/ stock if the buyer chooses to implement their right to purchase them.

 

The objective of this strategy is to grow the amount of profit that you can make by getting the premium from selling an options contract.

 

The basic advantage of using this covered call options strategy is that it can serve as a border against loss to your current position for a short period. The risk is that if the market price reaches the exercise price, you would have to give the agreed amount of the essential stock.

 

 

 

2.    Credit spread options strategy:

This stock options strategy consists of buying and selling options on the same stock at the same time, with the same ending date, but the exercise or the strike price is different. This strategy is also be considered as a risk management tool, as it restricts your possible risk by also restricting the possible returns.

 

 

 

3.    Bull Call Spread:

The investors purchase calls at a particular strike/exercise price while they also sell the same number of calls at a higher strike/exercise price at the same time. These stock call options will have the same termination date and the underlying stock. When an investor is expecting a bullish stage on the basic stock and expects a reasonable rise in the price of the stock then this is the type of vertical spread strategy, which is often used.

 

 

 

4.    Bear Put Spread:

In this stock options strategy, the investors buy put options at a particular strike/ exercise price and sell them at a lower strike/exercise price at the same time. These stock call options will have the same expiry date and the underlying stock. Bear Put Spread is the opposite of the bull call spread. This strategy shows an indication of the trader’s sentiments when he expects a decline or decrease in the prices of stock. The approach bids both limited losses and limited profits.

 

 

 

5.    Married Put:

 

In a married put stock options strategy, an investor purchases stock and at the same time buys put options for the same number of shares of stock. The holder of a put option can sell stock at the exercise price. An investor, to protect his downside risk when carrying a stock, may select this approach.

 

 

 

6.    Protective Collar:

 

This stock options strategy executed by buying an out-of-the-money put option and at the same time writing an OTM call option. The underlying stock and the ending date must be the same. Investors frequently use this strategy after a long position in a stock has experienced considerable gains and improvements. This permits investors to use downside security as the long put supports lock in the possible sale price. Nevertheless, the concession is that the shares may sell at a higher price, thus giving up the opportunity for additional profits.

 

 

 

7.    Long Straddle:

When an investor instantaneously buys a call and put an option on the same stock with the same strike value and ending date. Supposedly, this approach permits the investor to have the chance for limitless gains. Simultaneously, the extreme loss this investor can experience is narrow to the cost of these stock options contracts have.

 

 

 

8.    Long Strangle:

The investor purchases an OTM call stock option and an OTM put option simultaneously on a similar basic stock with the same expiration date. In this strategy, the investor believes the stock price will have a very great movement but is uncertain of which way the move will take.

 

 

 

9.    Long Call Butterfly Spread:

This strategy is the combination of both bull spread strategy and bear spread strategy. Three different exercise prices will be used in this spread. All options are for the same underlying stock and termination date.

 

 

 

10. Iron Butterfly:

First, the investor will sell an ATM put and buy an OTM put, and then simultaneously, they will sell an ATM call and buy an OTM call. They have the same termination date and are on the same primary stock.

 

This stock options strategy is the combination of selling an at-the-money straddle and buying defensive wings. This may consider the creation of two spreads. Both spreads can have the same width. The OTM call protects against the limitless downside and the OTM put protects against downside (from the short put strike to zero). Gains and loss are limited within a particular series, reliant on the exercise prices of the stock options used. Investors like this approach because it generates incomes and the increasing possibility of a small gain with a consistent stock.

 

 

 

11. Iron Condor:

 

In this stock options strategy, the investor at the same time carry a bull put and a bear call spread. The iron condor created by selling one OTM put and buying one OTM put of a lower strike and selling one OTM call and buying one OTM call of a higher strike. All options have the same termination date and are on the exact basic stock. Usually, the put and call sides have a similar spread size. This stock options strategy produces a net premium. This strategy has designed to take benefit of a stock going through low instability. Most of the traders use this approach for its observed high possibility of producing a minor amount of premium.