The call backspread is an investment strategy that involves selling a call at one strike price at a lower rate and then purchasing two calls at a higher strike price. This approach provides the call ratio backspread with a built in hedge component that is very likely to result in breaking even for the investor, and possible even realizing a small profit. The call backspread … [Read more...]
Long Call Option : Option Trading
The long call option strategy is the most basic option trading strategy whereby the options trader buy call options with the belief that the price of the underlying security will rise significantly beyond the strike price before the option expiration date. Unlimited Profit Potential Since they can be no limit as to how high the stock price can be at expiration date, … [Read more...]
Putting stops on options
One thing that I think is critical for any option trader whether they are an option seller or a buyer is a stop. Just like stock traders everyone who trades options should have a stop that tells them when to get out of a trade. There are a couple different ways you can go about placing a stop on an option. The first is placing a stop loss based on the price of the option … [Read more...]
Use of options to replace stocks or futures for massive profits
Options trading strategies are being used widely by traders and investors. This article describe how to use options to replace stocks or futures. It also describe options trading strategies that uses stock options and futures options. Option trading strategies included in this article are call options, bull call spread, call ratio backspread, put options, bear put spread and … [Read more...]
How Is Profit Calculated In An Options Trade?
How Is Profit Calculated In An Options Trade? The real difference between selling to close call options (or put options) before expiration and during expiration at market close is that when call options are sold before expiration, they have extrinsic value remaining while those same call options sold at market close on expiration day would have no extrinsic value left. As … [Read more...]