Option Trading Strategies

Choice trading in the world of stock market has a lot of income potential and it is packed with monetary benefits if you pick and follow the right strategy. There are plenty of option trading strategies that an investor can opt for from. Depending on the impression you have about the direction of stock price movement, you can pick a choice strategy. strategy

Presently there are several strategies for trading options that are being used mostly such as high, bearish and neutral strategies. For those who have an impression of the stock price heading either way then high or bearish strategies are used. If you have no clue about the stock price movement then neutral strategy is the right technique to opt for. 

When you expect the underlying stock price growing then bullish strategy should be used. However with this strategy it is very important to examine the amount that the stock price can increase and the period in which the move will occur. This assessment will help the dealer to select the best trading strategy. Some of the most frequent bullish option trading strategies used in the wall street game are the call buying strategy, the bull put propagate, bull call spread, brief put strategy, the long call, the covered call, the protective put and the collar strategy. The decision buying strategy is the most bullish strategy while the bull put pass on and bull call advances are the moderate ones. With this strategy you would probably generate profits as long as the stock price does indeed not go down by the expiration date.

Should you speculate that the root stock price will have a downward trend then bearish option trading strategy which is the reverse to the bullish strategy is the right one to pick. In the case of bearish strategy it is necessary to understand the level and also the time body at which the amount paid of a stock will fall season to pick the best trading strategy. Some of the commonly executed bearish strategies are short call, long put, short fake, put back spread, call bear spread, and put bear spread. The most bearish option trading strategy among all is the put buying strategy which is practiced mostly by beginners in this field. The call bear get spread around and the put carry spread are the reasonably bearish options strategies.

The moment you are clueless about the movement of the underlying stock price then you should pick simple option trading strategy which is also known as non-directional trading strategy. The potential profit is determined by the volatility of the hidden stock price. Some common examples of neutral trading strategies are straddle and butterfly.

In straddle strategy you would buy or sell option derivatives. The moment the trader buys the derivative then it is known as a long straddle whereas when the trader sells the mixture it is known as a short straddle. Puppies strategy is a less risky options trading strategy. This strategy includes two positions, the long puppies position and the brief butterfly position. When the future volatility is lower than the implied movements then you would make profit in a long butterfly whereas in a short butterfly, you make a profit only when the near future unpredictability of the underlying stock is higher than the implied volatility of the stock.

Besides these two neutral strategies, there are other frequently used strategies such as strangle, guts, risk reversal and condor.

Right now there are many online programs and training courses that will give you how to transact options and pick the right strategy that would fit your goals and trading style.

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