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Options offer income, hedging and ways to speculate based on market views. Dozens of different options trading strategies exist and can be tailored to fit a variety of investor needs and viewpoints.
Options trading allows investors to limit their risk and leverage their capital, but it can also expose them to amplified losses. It's one of the most flexible trading styles because of the many...
To hedge against risk on an existing stock position. ... The very first thing a novice should understand is the unique risk level associated with different options trading strategies. Consider ...
A hedge is an investment position intended to offset potential losses or gains that may be incurred by a companion investment. A hedge can be constructed from many types of financial instruments, including stocks, exchange-traded funds, insurance, forward contracts, swaps, options, gambles, [1] many types of over-the-counter and derivative products, and futures contracts.
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. Moderately bearish options traders usually set a target price for the expected decline and utilize bear spreads to reduce cost.
To an option trader engaging in volatility arbitrage, an option contract is a way to speculate in the volatility of the underlying rather than a directional bet on the underlying's price. If a trader buys options as part of a delta-neutral portfolio, he is said to be long volatility. If he sells options, he is said to be short volatility. So ...
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