Other Bullish Options Strategies
Here are some other ways to take a bullish position using options:
- Writing covered calls above market: Your client buys the stock - at the current market price - required for physical delivery, and then holds it until the option is exercised. Let's say the current price is $100 and the exercise price is $105. As long as the stock exceeds that exercise price prior to the expiration date, your client will profit.
- Writing uncovered puts: Writing a put is a similar strategy to buying a call. Your client is betting the stock price will go up.
Other Bearish Options Strategies
Bear strategies discussed earlier include buying puts and creating bear spreads. Here are some other ways to take a bearish position using options:
- Writing covered calls below market: Your client is betting the underlying stock price will drop below the strike price before the option is exercised.
- Writing uncovered calls: Writing a call is a similar strategy to buying a put. Your client is betting the stock price will go down.
Neutral strategies (discussed earlier) include creating straddles and combinations. Another way to take a neutral position is to write covered calls at market.
Long Term Equity Anticipation Securities (LEAPS)
InvestingWhile writing a covered call option is less risky than writing a naked call option, the strategy is not entirely riskfree.
TradingLearn how this simple options contract can work for you, even when your stock isn't.
TradingLearn how to buy calls and then sell or exercise them to earn a profit.
TradingThere are times when an investor shouldn't exercise an option. Find out when to hold and when to fold.
TradingOptions offer alternative strategies for investors to profit from trading underlying securities, provided the beginner understands the pros and cons.
TradingWriting an option is the process of selling to another investor the right, but not the obligation, to buy or sell a stock at a given price in the near future. It can also be referred to as shorting ...
TradingLearn how analyzing these variables are crucial to knowing when to exercise early.
TradingLearn more about stock options, including some basic terminology and the source of profits.
TradingThese five strategies are used by traders to capitalize on stocks or securities that exhibit high volatility.