When you learn to trade stock options, it is important that you keep all market conditions in mind. Whether you are trading in a bullish, bearish or neutral market, you can make money if you stick to a specific strategy. In the article “Learn Stock Option Strategies” from Strategic Options Trading, you can read about the most common strategies and how they work.
Bullish Strategy
Because most people invest when they believe the market is rising, this strategy is the most commonly used. If you believe the market will keep going in your direction, you can use strategies like a “debit spread” or a “covered call”.
Bearish Strategy
When you believe the market is taking a downturn, hedge your bets by using a “bearish credit spread” or a “debit/credit combo”. The great thing about these strategies is that they can be designed to be bullish or bearish if the market fluctuates.
Neutral Strategy
When you are unsure about the direction of the market, you will have to be flexible with the way you trade. Following the market closely, you can employ the “iron condor” strategy to maintain the best position.