Option Strategies You Should Master
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. If you want to take advantage of the flexibility and power of stock options, you must know the option strategies at your disposal. Below are the ten option strategies every investor should know before jumping into trading options.
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. Married Put which is perfect for protecting downside risk when holding a stock is another strategy you should know about; this strategy is meant to protect you in case the price of stock falls sharply which can be any time.
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. 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.
As a potential trading options investor long straddle is one of the most important strategies you should familiarize yourself with because it opens up the possibility of unlimited gains as well as significant losses too. 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.
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. These are the options strategies you should know of.