Finding the perfect strategy is important to gain massive profit through options trading. Beginners have several options when choosing a strategy, but first, you should understand what options are best for you and how they actually work. If the investor wants massive return they can take help of the market expert with their expert stock tips and stock option tips. Trading in option can help you to determine how much exactly risk you can bear in trading.The risk depends on the selection of strike, time value and volatility.
Following are topmost option strategies -
1.Covered Call -
In a covered call, you hold a long term position of an asset and sell a call against that asset. In this, your maximum profit is limited and your maximum loss is substantial. If volatility increases, it reflects negative effect, and if it decreases, it reflects a positive effect. When the underlying assets move against you, short calls offset your loss.
2.Married Put -
This is an option strategy where an investor holding a position, purchases a put on the same assets with an aim to protect against a falling of the price of that stock. In a married put strategy, a trader who purchases assets, same as he purchases a put option for the correspondent number of shares.Investors will use this strategy when they are bullish on the particular asset's price and they want to protect against short-term losses.
3.Bull Call Spread
In this strategy, a trader buys call options at a specific price and sell the same number of calls option at a higher price. Both the options will have the same maturity month and a same number of assets. This strategy is often used when a trader is bullish and expects a moderate rise in the value of the asset.
4.Bear Put Spread
In this strategy, a trader purchases put options at a specific price and sell the same number of puts at a lower price. Both the options will have the same maturity month and a same number of the asset. This method is used when the trader is bearish and expects the decline in the price of underlying assets. It provides both limited loss and gains to the investors.
This is a strategy where an investor purchase an out of money put option and subsequently writing an out-of-the-money call option at a similar time, for the same asset. In this way, investors can lock their profits without selling their share.
In this option strategy, traders purchase both calls and put option for particular assets with same strike price and expiration date. A long straddle is an option strategy where an investor buys long call and put of the same asset, expiration date and strike price. The strike price will usually at the money or near the current market value of the particular assets.
These strategies are used by traders according to their profit goal. Many investors refer option tips, binary option trading tips and much more to increase their profit in the market.
Keywords: stock tips, binary option trading tips
Article Directory: http://www.articlecatalog.com
Copy and Paste Link Code:
Read other Articles from kirtimeliwal:
- Top 5 common mistakes in stock trading and how to overcome them?
- Binary option vs. Forex trading – let's understand the difference
- What is day trading? Hidden benefits of day trading
- Risk and benefits of trading in gold
- How does the stock market work
- What are the requirements to start trading in stock market
- What will be the impact of GST on the stock market
- 5 Effective tools for stock Investors
Article ID 1048564 (Views 56)