Option Strategies!

张玉 · 发表于 2009-12-16 13:05

Option Strategies!

1. Long (Holder) Call – Expects the price of the underlying stock to go up. Maximum profit unlimited. Maximum loss – premium paid. Breakeven Point –strike price + premium paid. Call prices drop if the stock goes ex-dividend. Choose stocks that look as if they are ready to break out. Use charts rather than fundamentals. Pay for the option in full – do not use margin. Out of the money calls have greater profit potential. Best risk/reward usually is found with the contract that has a strike price just out of the money. Near term calls are riskier than far-term calls. Don’t buy cheap options just because they are cheap.
2. Short (Writer) Call – Naked Call high risk – Like a short sale, risk is unlimited because the underlying stock could go up for ever and if exercised one would have to go out into the open market to purchase stock to make good on the exercise. Speculators do this because they do not have to put up any money to put the trade in place. Adds income. Expect the shares to remain the same or drop slightly.
3. Long (Holder) Put – expect the price of the security to drop. Provides a way to short sale, yet minimize the risk. Put prices go up if a stock goes ex-dividend.
4. Short (Writer) Put – Write a put to add income or to set the price to acquire stock. Expect the stock to remain the same or move up slightly.
5. Short call and Long Stock – Covered Call safer than writing a naked call because if you are exercised, you already own the stock and don’t have to go out on the open market to buy the stock to deliver to the holder. Pick a low volatility stock. Looking to add income without giving up the stock. You lose money on your position if your stock falls more than the downside protection you gained by selling the option.
6. Short Put and Short Stock – Protective Put – Not recommended for beginners. The premium received acts as protection for the short sale, but this protection is limited! Big losses can occur. Speculators do it because the margin is covered by the short sale.
7. Long Call and Short Stock – Short Hedge – Think the stock is going down but want some short term upside insurance.
8. Long Put and Long Stock – Long Hedge – Think the stock is going up but want some short term downside insurance.

Spreads

9. Straddle – At the Money Put and Call – Potential for large profits. Look for volatile stocks. Don’t have to predict which direction the market is going to move. Losses are kept to the dollar amount of your initial investment. Increase your return after the stock moves by closing out the losing contract. Lose money if the underlying stock does not move.
10. Strangle – Out of the Money Put and Call – Same rules as a straddle but the volatility of the stock must be greater to give a profit, however, if the stock is does move substantially percentage returns will be higher than a straddle. Strangles are riskier than a straddle because the stock price must move further to give a profit.
11. Strip – Two Puts and One Call
12. Strap - Two Calls and One Put
13. Bull Call Spread – Vertical Spread – Different Strike Prices
14. Long Call Calendar Spread – Horizontal Spread – Different Expiry dates
15. Long Butterfly Spread – Ratio Spread
16. Long Synthetic Combination

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