Candlestick Trading Blog
October 16, 2009
Selling Options
| Neutral Options Trading Strategies Many investors considered selling options riskier than making straight equity trades. However, with proper options training, many experienced traders make additional profits from taking option trades with stocks already in their portfolio. While the majority of options held through expiration will expire worthless, they can still provide insurance for the underlying asset. As in any stock market position, the hardest part of selling options is determining which direction the market will move, and when. Selling Covered Calls - Selling a covered call means that there are investors willing to pay for the right to take a stock if it reaches a much higher price. You should have at least 100 shares of the stock, as options are priced in 100 share lots. This can be a great stock market strategy to implement while waiting for a stock to reach your sell point. This technique can be used over and over, as an additional way to create income from the same stock. Sell Straddle - This is a more risky stock option trading strategy to sell a call option and a put option on the same asset with the same price and expiration date. This results in a limited gain for an unlimited risk. Selling a straddle requires extreme caution and constant monitoring of the position, and you must be accurate on the price direction of the stock. A Sell Straddle is definitely not recommended for all investors; the risk reward ratio is not favorable to anyone but the most experienced trader. Sell Strangle - Whether the market is stable or volatile, bullish or bearish, there is always a way to find a profit. Such is the case with a Sell Strangle. This technique requires the investor to sell a Call Option that is out-of-the-money as well as a Put Option that is also out-of-the-money; both the Call Option and the Put Option need to be on the same stock with the same expiration date. This is similar to a Sell Straddle but with a Sell Strangle, the strike prices are not the same. Calendar Spread - When market conditions are neutral (neither bullish nor bearish), a Calendar Spread is another way to make money investing in stock. A Calendar Spread, also known as a horizontal spread or time spread, is an options selling strategy where strike prices are the same, but with different expiration dates. Simple options strategies provide a tremendous source of income when the right trading strategy is applied to the correct price move. These simple trading techniques will be demonstrated thoroughly during the Candlestick Forum Option Trading program on October 17 and 18th. If you would like to learn how to dramatically increase your income while at the same time reducing your risk, take advantage of the trading knowledge that has been applied to over 20 years of candlestick application. Click here for more information. Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
|
 |
|
 |
|
 |
|
 |
------------------------------------------------------------------- -
0 Comments:
Post a Comment
<< Blog Home