When buying and selling options, you must employ an options trading strategy in order to maximize your profit. Your strategy will depend on whether the market is bullish, bearish or neutral. No matter what the market is doing, you can use an options trading strategy to make money from it. During a bullish market when stock prices are expected to rise, most options traders use the “bull call spread” and “the bull put spread” as their strategy.
Option strategies are the simultaneous, and oftentimes mixed, buying or selling of one or more options that differ in one or more of the options’ variables. This is often done to gain exposure to a specific type of opportunity or risk while eliminating other risks as part of a trading strategy. A very straight forward strategy might simply be the buying or selling of a single option, however option strategies often refer to a combination of simultaneous buying and or selling of options.
Options strategies allow to profit from movements in the underlying that are bullish, bearish or neutral. In the case of neutral strategies, they can be further classified into those that are bullish on volatility and those that are bearish on volatility. The option positions used can be long and/or short positions in calls. Click this ink to finish reading Options strategies.
During a bearish market when stock prices are expected to fall, the “bear call spread” and the “bear put spread” are commonly used. When it is unclear whether the price will rise or fall, there are numerous non-directional strategies that can be activated.