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5 options trading strategies for beginners 1. Long call. ... In exchange for selling a put, the trader receives a cash premium, which is the most a short put can earn. If the stock closes below ...
The options trader makes a profit of $200, or the $400 option value (100 shares * 1 contract * $4 value at expiration) minus the $200 premium paid for the call.
2 safer option strategies for beginners. ... Specifically, it involves buying a call option and selling a put option at the same expiration and same strike price, which should be at or around the ...
An option is a contract that allows the holder the right to buy or sell an underlying asset or financial instrument at a specified strike price on or before a specified date, depending on the form of the option. Selling or exercising an option before expiry typically requires a buyer to pick the contract up at the agreed upon price.
Selling a Bearish option is also another type of strategy that gives the trader a "credit". This does require a margin account. The most bearish of options trading strategies is the simple put buying or selling strategy utilized by most options traders. The market can make steep downward moves.
It involves simultaneously buying and selling (writing) options on the same security/index in the same month, but at different strike prices. (This is also a vertical spread) If the trader is bearish (expects prices to fall), you use a bearish call spread. It's named this way because you're buying and selling a call and taking a bearish position.
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