Options strategies in a bull market

Bull Market Options Trading Strategies

 

options strategies in a bull market

opportunities to profit from market participation. Managed by OCC, OIC delivers pleased to introduce the Options Strategies Quick Guide. This guide outlines a range of strategies for investing with options. bull strategy BULL CALL SPREAD +-stock price profit loss. What are common trading strategies used in a bull market? Buy and Hold. This is the simplest strategy and it is utilized by passive investors. Increasing Buy and Hold. This strategy is for investors who are more active Retracement Additions. More aggressive investors, those seeking to make. option strategies in a bull market, is the first in a series designed to help you identify what may be an appropriate strategy in specific market environments, why you use options, and potential risks or rewards they offer.


10 Options Strategies To Know


Bullish strategies[ edit ] Bullish options strategies are employed when the options trader expects the underlying stock price to move upwards, options strategies in a bull market. The trader can also just assess how high the stock price can go and the time frame in which the rally will occur in order to select the optimum trading strategy for just buying a bullish option. The most bullish of options trading strategies is simply buying a call option used by most options traders.

The stock market is always moving somewhere or some how. It's up to the stock trader to figure what strategy fits the markets for that time period. Moderately bullish options traders usually set a target price for the bull run and utilize bull spreads to reduce cost or eliminate risk altogether. There is limited risk trading options by using the appropriate strategy. While maximum profit is capped for some of these strategies, they usually cost less to employ for a given nominal amount of exposure.

There are options that have unlimited potential to the up or down side with limited risk if done correctly. The bull call spread and the bull put spread are common examples of moderately bullish strategies.

Mildly bullish trading strategies are options that make money as long as the underlying stock price does not go down by the option's expiration date. These strategies may provide downside protection as well. Writing out-of-the-money covered calls is a good example of such a strategy. However, Covered Calls usually require the trader to buy actual stock in the end which needs to be taken into account for margin. This is options strategies in a bull market it's called a covered call.

The trader is buying an option to cover the stock you have already purchased. This is how traders hedge a stock that they own when it has gone against them for a period of time. The stock market is much more than ups and downs, buying, selling, calls, and puts.

Options give the trader flexibility to really make a change and career out of what some call a dangerous or rigid market or profession.

Think of options as the building blocks of strategies for the market. Options have been around since the market started, they just did not have their own spotlight until recently. Bearish strategies[ edit ] Bearish options strategies are employed when the options trader expects the underlying stock price to move downwards. It is necessary to assess how low the stock price can go and the time frame in which the decline will happen in order to select the optimum trading strategy.

Selling a Bearish option is also another type of strategy that gives the trader a "credit". This does require a margin account, options strategies in a bull market. The most bearish of options trading strategies is the simple put buying or selling strategy utilized by most options traders. Stock 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.

This strategy has limited profit potential, but significantly reduces risk when done correctly. The bear call spread and the bear put spread are common examples of moderately bearish strategies. Mildly bearish trading strategies are options strategies that make money as long as the options strategies in a bull market stock price does not go up by the options expiration date. However, you can add more options to the current position and move to a more advance position that relies on Time Decay "Theta".

These strategies may provide a small upside protection as well. In general, options strategies in a bull market, bearish strategies yield profit with less risk of loss.

Neutral or non-directional strategies[ edit ] Neutral strategies in options trading are employed when the options trader does not know whether the underlying stock price will rise or fall. Also known as non-directional strategies, they are so named because the potential to profit does not depend on whether the underlying stock price will go upwards, options strategies in a bull market. Rather, the correct neutral strategy to employ depends on the expected volatility of the underlying stock price.

Examples of neutral strategies are: Guts - buy options strategies in a bull market gut or sell short gut a pair of ITM in the money put and call compared to a strangle where OTM puts and calls are traded ; Butterfly - a neutral option strategy combining bull and bear spreads. Long butterfly spreads use four option contracts with the same expiration but three different strike prices to create a range of prices the strategy can profit from.

An iron condor options strategies in a bull market be thought of as selling a strangle instead of buying and also limiting your risk on both the call side and put side by building a bull put vertical spread and a bear call vertical spread; Jade Lizard - a bull vertical spread created using call options, with the addition of a put option sold at a strike price lower than the strike prices of the call spread in the same expiration cycle; Calendar spread - the purchase of an option in one month and the simultaneous sale of an option at the same strike price and underlying in an earlier month, for a debit.

They include the long straddleoptions strategies in a bull market, long stranglelong condor Iron Condorlong butterfly, and long Calendar. Bearish on volatility[ edit ] Neutral trading strategies that are bearish on volatility profit when the underlying stock price experiences little or no movement.

Such strategies include the short straddleshort strangleratio spreadsshort condor, short butterfly, and short calendar.

 

Bullish Trading Strategies | The Options & Futures Guide

 

options strategies in a bull market

 

opportunities to profit from market participation. Managed by OCC, OIC delivers pleased to introduce the Options Strategies Quick Guide. This guide outlines a range of strategies for investing with options. bull strategy BULL CALL SPREAD +-stock price profit loss. option strategies in a bull market, is the first in a series designed to help you identify what may be an appropriate strategy in specific market environments, why you use options, and potential risks or rewards they offer. The bull condor spread is an options trading strategy designed specifically to return a profit if the price of a security rises to within a forecasted price range. It's somewhat similar to the bull butterfly spread, but it doesn't require quite the same levels of accuracy.