Series 7

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Derivatives - Other Options Strategies


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)

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