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The best brokers for options trading can help you identify attractive options trades. 2. Bear put spread. What the bull call spread does for rising stocks, the bear put spread does for falling stocks.
Name. Purpose. How it Works. Benefits. Risks. Covered Calls. Income. Investor owns underlying stocks and sells call options allowing buyer to purchase the shares at set strike price by expiration ...
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The trader may also forecast how high the stock price may go and the time frame in which the rally may occur in order to select the optimum trading strategy for buying a bullish option. The most bullish of options trading strategies, used by most options traders, is simply buying a call option. The market is always moving.
If the trader instead buys a nearby month's options in some underlying market and sells that same underlying market's further-out options of the same striking price, this is known as a reverse calendar spread. This strategy will tend strongly to benefit from a decline in the overall implied volatility of that market's options over time.
This options trading strategy is the flipside of the long put, but here the trader sells a put — referred to as “going short” a put — and expects the stock price to be above the strike ...
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