19 Aug The Best Option Strategies for Trading
Traders often misunderstand option strategies as they try to get the hang of the many risks and benefits that they provide. With such a form of misplaced decision making, one will not reach the right limit or the place where they will be able to accomplish their goals and objectives. So to establish a clear picture of the matter, we are here with the best options strategies that are apt for trading. Hence, go ahead and read them all out one-by-one.
1. The Long Put
The long put is an essential strategy that has been considered as a popular option by a lot of investors. It takes shape as the trader buys a put expecting the stock to go below the strike price right before expiration. As a result, if the strategy is implemented at the right time, then you expect things to head in a proper direction. Traders will earn significant returns on their investments by short-selling the stock and by utilising the long put option.
2. The Short Put
The short put is another critical strategy that gets implemented as the trader sells a particular put expecting the stock to go higher than the strike price by expiration. This method is quite similar to selling insurance against the stock when it falls below the strike price. In terms of usage, one can always expect the same to bear results when it is brought in at the right time. Moreover, the strategy also helps an investor achieve a more attractive price on the underlying stock.
3. The Long Call
Long call refers to a strategy where the trader buys a call expecting the stock to be below the strike price before the expiration. It is quite similar to long out, except for the fact that it pays out when the stock rises. So if you’re expecting the stock to move higher, then this particular strategy is the suitable option for you. Apart from that, it can also help you earn a much higher return when compared to the other scenarios that test the market. To understand the many implications of this process and move forward to utilise the same.
4. The Married Put
The married put is quite different from the rest as it moves ahead to bring in several changes, provided they are implemented effectively. The strategy gains form when the trader buys put options on stock for every 100 shares of the underlying stock owned. The investor further suspects the stock may fall in the short term but wants to move ahead by holding as it may rise soon. As a result, the married put option protects the investor’s downside and stands to be an ideal setup that coms forward with returns.