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Option Strategy - Forex Quotes - Forex Real Time

Author : stoptroncm stoptroncmo


If you just bought a one-sided option, and the price goes the wrong way, you're looking at possibly losing your entire premium investment. A straddle is created when both a put and a call are purchased on the same security at the same strike price and for the same expiration. This Article Is Provided By The Options University: Options Trading Strategies For Safer Investing and Consistent Profits. For example: write the XYZ June 30 Put and also write the XYZ June 30 call. Normally time spreads have a neutral basis but they can also be designed for a bullish or bearish basis.

The risk/reward profile is very similar to the Long Call; thats why this strategy is also referred to as a synthetic call. When an investor is less bearish, the strike prices used should be closer to the current market price of the stock and the strikes should be closer together.

The second month option will be sold short thus re-initiatingyour covered call strategy. It's also important not to abandon your system the second you see a trade making a loss. The stock starts to trade down and finishes at $26.00. Far too many traders think that they're only successful if every trade is a winner, which is ridiculous.

If the option is going to finish out of the money, you would letit expire worthless and then sell the next months call. This is often employed when an investor has a short-term neutral view on the asset and for this reason hold the asset long and simultaneously have a short position via the option to generate income from the option premium. Buy a near-term Put Option: The advantage is Leverage with fewer dollars at risk; however, the option will experience rapid time decay. This way you can increase your window of profit opportunity just incase there is a price move. These are only a few of the most common ones.

4) Long Combination (Long Strangle): This strategy is similar to the Long Straddle as it involves buying a put option and a call option on the same stock; however, you use different strike prices. This means that you will have to be prepared to roll yourcalls out to the next month come expiration. If you would like to learn more about Option Trading Strategies please visit - Conservative Options or just type in For call options, the option is said to be out-the-money if the share price is below the strike price. These pieces of data can consist of charts, indicators, oscillators, fundamental analysis, news or even tips.

You buy September 500 Calls for $16 (you have $1000 so you can afford 1 contract (sold in 100 board lots). They can buy different amounts of Calls and Puts with different Strike Prices or Expiration Dates, modifying the Straddles to suit their individual strategies and risk tolerance. Short a straddle is used when you are sure that the underlier will be less volatile. Writing the put options obligates the investor to buy the stock from the option buyer if the stock price decreases below the strike price and the option buyer decides to exercise the option. This way, as long as the stock price remains somewhat stable you will profit.

Once you start to look at trading stocks, you find yourself plunged into a confusing nightmare where hundreds if not thousands of people are pushing "their" system that is supposedly infallible. This provides you with protection against a price decline while you can still participate in all upside in the stock price. 3) Long Straddle: This strategy is the opposite of the Short Straddle; an investor will simultaneously buy a call option and a put option on the same stock with the same strike price and same expiration date. This is the price where a stock price must go above (for calls) or go below (for puts) before a position can be exercised for a profit. This strategy is implemented by purchasing a call option on a stock while shorting the stock.

Further, this strategy is often referred to as a synthetic put as it has a similar risk/reward payoff as buying a put option. The most basic options strategy is referred to as the covered call. Writing the put options obligates the investor to buy the stock from the option buyer if the stock price decreases below the strike price and the option buyer decides to exercise the option.

Another approach is to take your profits after a certain percentage of gain, and occasionally put up with a medium sized loss. To view my strategies, tips, and stock picks please visit An in-the-money option not only has extrinsic value butalso some intrinsic value. Long Call: Simply buy a call option on a stock.


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Submitted : 2011-03-31    Word Count : 818    Times Viewed: 238