Options are one of the stock market's most lucrative, albeit risky, instruments. People often treat the option as a gamble. They buy naked "Calls" & "Puts" by taking a biased view of the market without any robust strategy. It's a fact that almost 95% of retail traders end up losing money, which is why it's so exciting to discover the Options Trading Strategies that successful traders use to maximize their gains while minimizing risks. If you want to earn expertise and make a good profit in this field, it's essential to learn these strategies. But one thing that you need to understand first. Professional traders treat options as hedging instruments. Here is the list of the 10 most popular Options Trading strategies that can be helpful.
Are you ready for an exciting journey into the world of Options Trading Strategies? If you're looking to make a good profit and earn expertise in this field, then learning these strategies is essential. As a beginner, it's easy to become overwhelmed by the complexities of trading, but don't worry! Successful traders have already done the hard work for you. With the right approach, you can maximize your gains while minimizing risks. It's exciting to know that there are proven tactics that almost 95% of retail traders don't know about. By mastering these strategies, you'll be ahead of the game and on your way to financial success. So why wait? For in-depth knowledge, you can join us to learn these effective Options Trading strategies to earn good profit.
This course is designed for those who want to trade options professionally, in this course you will get to know how options..
This course is designed for those who want to become a Full-Time Trader and earn money by regular trading in the stock market.
All traders work to earn profits. But did you know there are option trading strategies that are designed to guarantee profits? Here are some of the popular strategies:
This strategy involves simultaneously buying a stock and selling its call option at a higher strike price. You receive the premium by selling the call.
Scenario 1: Market Price remains below Strike Price
You can keep the premium amount and also hold the stock for future profits.
Scenario 2: Market Price goes above Strike Price
You can sell the stock and keep the premium amount.
All in all, you are in profit by applying this strategy. As you can see, this strategy generates steady income. There is a lesser risk as you earn the premium. However, this strategy is fruitful in a stable market. One drawback of this strategy is that it limits the upside potential if the stock price rises sharply.
In this strategy, you have to sell a put option at a lower strike price compared to the market price. You receive the premium upfront.
Scenario 1: Stock price goes below the strike price
In this case, you must buy the stock at the strike price. So, you earn the premium and can hold the stock to profit in the future.
Scenario 2: Stock price remains above the strike price
In this case, you keep the premium and the option lapses.
By applying this strategy, you can buy the stock at a lower price while generating income. However, you should have enough cash to buy the share, and there is a high risk of loss if the price falls significantly.
Another popular stock options trading strategy is Iron Condor. This is one of the best strategies in a low-volatility market. You have to simultaneously buy and sell both call & put options. The aim is to earn the net premium from all the trades. In low-volatility markets, you keep the premium as the options expire. However, you need to be accurate at predicting the market. If the stock price moves significantly, you incur limited losses.
In this options trading strategy, you have to buy a stock that is going to pay dividends and sell its call option. This is based on the premise that the stock price falls after the dividend is announced. You can earn the premium by selling the call and the dividend on the stock. Holding the stock can also generate profits in the future.
Now, let’s take a look at the popular options trading strategies that can be used to hedge against losses.
You purchase a Put option along with stock. As the name suggests, the Put option acts as a safety net against the fall in stock price. If the stock price falls below the strike price, you gain from the put option. Thus, it offsets the loss of the stock. However, you lose the premium if the stock price remains stable or rises.
To implement the collar strategy, you have to combine the covered call and protective put strategies. You earn a premium on selling the call option and pay the premium on buying the put option. While put protects against the downside risk, the call option provides the potential for high returns.
One of the most popular options trading strategies is long straddle. To execute this strategy, you need to buy both calls and put options at the same strike price for the same expiration date. You can profit if the price moves significantly in either direction. However, it doesn’t work in a stable market, and you will lose premiums on both options.
Now comes the million-dollar question, literally. How much money do you need to implement stock options trading strategies? Money is needed for:
You need to pay a premium for purchasing options. You need to invest your capital to cover this premium amount. Options typically have lot sizes. This means you have to trade a minimum number of options included in a lot.
Some advanced strategies involve complex structures where you have to buy various options as well as the underlying stocks. You need liquid money to be able to pay for this investment.
Stock brokers often allow you to trade options by depositing a percentage of the trade value as a margin. By doing so, you can trade more with a lower budget while securing the broker against scenarios of sudden losses.
To learn the ins and outs of options trading and the most popular options trading strategies, join the GTF options trading course.
This is a Bullish Options Trading strategy where the traders believe the underlying asset will move in the upward direction. But they want to protect the profit if the asset price doesn't move.
So the strategy is simple. Here you buy one At the Money (ATM) call option of an asset & Sell one Out of the Money (OTM) call option. It's important to note that the expiry date & the underlying asset of both the options should be the same. So when the price moves up a little, the ATM call option will move higher & the time-decay will help scalp some profits in OTM calls.
If the price goes down, OTM calls will decay faster, limiting the losses of ATM calls.
This is also a Bullish Options Trading Strategy where the trader believes the underlying asset shows little bullish momentum. It's almost similar to the Bull Call Spread strategy. The only difference is that you buy & sell Puts instead of Calls.
This is a bearish strategy that can be useful when the view on any asset is moderately bearish. This is a straightforward yet effective strategy. You buy 1 OTM call option & sell 1 ITM Call option for a particular strike price with the same expiry.
If the underlying asset price goes down as expected, you will get the premium of the ITM to call you sold & it will cover the slight loss of your OTM option.
If the price of the said asset goes up and you incur losses in shorted ITM Call Option, your losses will be reduced by the profits in the Long OTM Call Option.
This strategy comes into play when a trader has negative sentiment about any underlying asset. Deploying this strategy, a trader can make money even if the market is down slightly.
The strategy is pretty simple. You buy an In the Money (ITM) Put option & Sell (OTM) Put option. Both the options should have the same underlying asset & expiry date.
If the asset falls a bit as predicted, the trader will gain profit in ITM puts & minor or no loss in OTM puts. The reason is time decay or theta decay. If the asset moves up, ITM put will reduce, but the OTM will offset the losses puts you sold.
Proper knowledge of Options Trading Strategies is requiring gaining expertise and our experts has that excellent knowledge, to guide you properly.
This Options Trading strategy minimizes the risk of loss in any invested stock. This options trading strategy is very effective, especially if you think you are not sure about the direction of the store. Here, you have to buy a stock usually & sell the Call options of the same stock. E.g The stock you are buying has a lot of 100 stocks in an opportunity. So you will buy 100 stocks & will sell one lot of the Call option.
So when a stock price increases quickly, your losses in the shorted Call options will be covered by the Long Stock position. Similarly, if the market goes down, you will offset your loss in the long stock position with the shorted call option.
This options trading strategy is perfect if the investor is ready to take small losses to realize a total gain. In practice, this strategy can be helpful only when the underlying asset moves in any direction.
The strategy is pretty straightforward. You buy a Call option & Put the possibility of any underlying asset with the same strike price & expiry. Your maximum loss will be the sum of the premium you paid for both options.
Now, no matter in which direction the stock price moves, your trade will turn profitable if it shows a quick movement.
These Options Trading strategies can be helpful in case there is a high chance of a significant move of the asset in any one direction. E.g., this strategy is beneficial when the quarterly or yearly results are coming out.
Here you have to buy the OTM call option & OTM put options. As OTM options are cheaper than ATM options, the investment & hence possible loss will be less. The benefit of Long Strangle over Long Straddle, it's less expensive.
Now, if the underlying asset shows a significant move in any direction, OTM will become either ATM or ITM & you can reap good profit from it. But the pre-condition here is the movement should be significant & rapid. Otherwise, the time-decay will kick in & premiums will decay.
This options trading strategy is useful when the view of any underlying asset is slightly bearish to neutral. This strategy can help you earn a profit, even if the price moves upside. But the maximum gain will be realised only when the price quickly moves downward.
In this strategy, you must buy 1 ATM call & 2 ATM Puts.
Ensure the options are of the same asset, strike price & same expiry. The maximum profit in this strategy is unlimited & maximum loss is equal to the sum of the net premium you paid to buy all the options.
There are times when the market is poised to show no movement, i.e., the view on the market is neutral. In such situations, these Long & Short Straddles can help you earn profit.
In Long Straddle, you have to buy the ATM call option & ATM put option of the same underlying asset & the same expiry. Here the profits are unlimited, but losses equal the total premium paid.
In Short Straddle, you have to sell ATM call options & ATM put options of the same underlying asset & the same expiry. Here the maximum profit is equal to the sum of the premiums of the options you sold & losses are unlimited.
This Options Trading strategy is similar to the above-mentioned Long & Short Straddle. The only difference is, in Long & Short Strangle, you buy or sell OTM options instead of ATM options. This means the investment required for Long & Short Strangles is considerably less.
For Long Strangle, you buy one OTM call option & one OTM put option.
For Short Strangle, you sell one OTM call option & one OTM put option.
A significant movement in any direction will give you good profits.
Apart from these, there are a lot of other Options Trading strategies that traders use regularly. These are some of the most common ones. We will guide you in a proper manner for every Options Trading strategy. Want to learn more about Options Trading strategies? Connect Now
What are the options trading strategies that can give you more profits when the markets are stable?
This strategy involves buying and selling Out of the Money (OTM) Call and Put options simultaneously. You earn the net premium amount upfront, and the options expire if the stock price remains stable.
As the name suggests, this options trading strategy creates a spread that looks similar to a butterfly.
You earn the net premium from the butterfly spread and are covered for fluctuations by the wings. As a result, your profits and losses are limited.
As the name suggests, in this options trading strategy, you can play with the concept of time decay. To set up this strategy, you need to buy a longer-term option and sell a shorter-term option having the same strike price.
You earn the premium on the shorter-term option while staying invested in the longer-term option to gain value. This spread is possible for both Call and Put options and is best suited if you think that the markets will be stable or move in one direction only.
This options trading strategy involves selling Out of the Money (OTM) Call and Put options simultaneously. You collect the premiums upfront. If the stock price remains within the range of your options, the highest profits are possible.
Each Options Trading strategy mentioned above is good. All you need is good knowledge & skills to implement it. And these are the things you cannot learn without practical knowledge. You need a systematic learning approach with the guidance of mentors like we have at getting together Financial. These specialists have created fully customized options trading strategies that are very efficient & tested in a real-life environment.
The strategies mentioned above are very common & readily available. So why don't all people make money They lack proper training & guidance. They do not have access to the knowledge necessary to implement these strategies effectively. Thankfully, you can have that knowledge by joining us to know more about Options Trading strategies. You can learn various advanced Options Trading strategies with our experts. So why delay? Start learning and earning today.
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