understanding stock option trading strategies pdf

easy-to-understand language, from my Advanced Options Course:. Butterfly Spread All of the strategies up to this point have required a combination of two different positions or work at home jobs wausau wi contracts. This strategy becomes profitable when the stock makes a very large move in one direction or the other. This strategy functions just like an insurance policy, and establishes a price floor should the stock's price fall sharply. They might be looking to generate income (through the sale of the call premium or protect against a potential decline in the underlying stocks value. The only downside to this strategy occurs if the stock does not fall, in which case the investor loses the premium paid for the put option. A popular example would be using options as an effective hedge against a declining stock market to limit downside losses. Your training is better that theirs and it was free! I learned more from you than I did from them!

Understanding stock option trading strategies pdf
understanding stock option trading strategies pdf

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Stock Basics tutorial first. This options combination allows investors to have downside protection (long puts to lock in profits while having the trade-off of potentially being obligated to sell shares at a higher price (selling higher more profit than at current stock levels). Think of it this way: wine is a derivative of grapes; ketchup is a derivative of tomatoes; a stock option is a derivative of a stock. These may be stocks, bonds, ETFs, and even mutual funds. Profit and loss are both limited within a specific range, depending on the strike prices of the options used. This strategy has both limited upside pair trading strategies with options and limited downside.

Understanding stock option trading strategies pdf
understanding stock option trading strategies pdf

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