Option Strategies
Combine calls and puts to construct specific price outcomes. Option strategies give you the flexibility to profit from rising, falling and directionless markets.
Bullish strategies
Profit from a Rising Market
Long Call Option →
Short Put Option →
Long Synthetic →
Call Backspread →
Call Bull Spread →
Put Bull Spread →
Covered Call →
Protective Put →
Collar →
Bearish strategies
Profit from a Falling Market
Short Call Option →
Long Put Option →
Short Synthetic →
Put Backspread →
Call Bear Spread →
Put Bear Spread →
Market neutral strategies
Profit in a Sideways Market
Iron Condor →
Long Straddle →
Short Straddle →
Long Strangle →
Short Strangle →
Long Guts →
Short Guts →
Call Time Spread →
Put Time Spread →
Call Ratio Vertical Spread →
Put Ratio Vertical Spread →
Long Call Butterfly →
Short Call Butterfly →
Long Put Butterfly →
Double Calendar →
About Option Strategies
Generally, an option strategy involves the simultaneous purchase and/or sale of different option contracts, also known as an option combination. There is such a wide variety of option strategies that use multiple legs as their structure, however, even a one legged Long Call Option can be viewed as an option strategy.
But what if you bought a call and a put option at the same strike price in the same expiry month? How could a trader profit from such a scenario? This is called a Long Straddle — one of the most popular market neutral strategies.
In this example, imagine you bought 1 $40 July call option and also bought 1 $40 July put option. With the underlying trading at $40, the call costs $1.14 and the put costs $1.14 also — a total outlay of $228, which is your maximum loss.
If the market rallies, the call option becomes increasingly profitable while the put expires worthless. If the market sells off, the put becomes profitable while the call expires worthless. Either way, as long as the move is large enough to exceed the $228 cost, you profit.
This is just one example of an option combination. There are many different ways to combine option contracts together — and also with the underlying asset — to customise your risk/reward profile.
For further analysis tools, take a look at the Volcone Analyzer — it analyses any option contract and compares it against historical averages, helping you decide whether to buy or sell.
105 Comments
anjanappa July 30th, 2010 at 2:04am
call opt put optns strategies, i am very succsed in this field pl anybody try and earn get more money thank u
Peter May 26th, 2010 at 12:57am
No, OTC can mean a transaction between two parties for any type of financial instrument - even stocks can be traded OTC.
Maria May 25th, 2010 at 9:16am
When somebody talks about OTC Commodities: does this only mean Commodities options?
Peter May 11th, 2010 at 6:34am
It's where you buy/sell the underlying to reduce your delta exposure.
piyul May 7th, 2010 at 8:24am
what is hedging stratges
roshan March 27th, 2010 at 8:18am
wat is option101
Peter July 19th, 2009 at 8:18am
Hi Yogesh, any strategy that has unlimited updside profit potential e.g. Long Straddle, which allows for unlimited profit if the stock trades up or down.
yogesh July 18th, 2009 at 5:11am
which strategies use for give the more profit plz reply the answer
priyal May 9th, 2009 at 4:25am
for understanding option u have to read more books & be practical
Vinesh May 6th, 2009 at 9:55pm
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