Options trading allows investors to buy and sell contracts that give the holder the right to buy or sell an underlying asset at a specified price within a certain timeframe. Investors can use options to speculate on the direction of an asset’s price or to hedge against downside risk.
There are two types of options:
Call options give the holder the right to buy an underlying asset at a specified price, while put options give the holder the right to sell an underlying asset at a specified price. Options can be traded through most brokerage accounts on exchanges, or over-the-counter (OTC).
Options trading is a versatile strategy that can be used to speculate on the direction of an asset’s price, generate additional portfolio income, or hedge against downside risk. For example, investors who are bullish on an asset can use call options to buy the asset at a lower price than its future potential. Similarly, investors who are bearish on an asset can use put options to sell the asset at a higher price than it would trade for in the open market.
Options can also be used to hedge downside risk. For example, an investor who owns a stock may use options to hedge against the risk of the stock declining in value. By buying put options, the investor can protect their downside risk.
Many will say that trading options is risky. However, the risks are similar to trading stocks. Investors should consider trading options only on underlying securities they’d like to own while considering the probabilities of a profitable outcome.
Have you heard about LEAPS options trading strategies and wondered what they are and how they work? Or maybe you found this after reading an article, watching a video about leaps options, or trading in general and wanted something more – maybe something that made more sense to you. Even in , buying and selling leaps …
Leaps Options Strategies: 2 Ways to Profit in A Bullish Market Read More »
A long straddle is an options trading strategy that involves buying a call and a put option with the same strike price and expiration date. The trade is profitable if the underlying asset’s price move exceeds the total premium paid for the options. We say “long” because we are buying the options. The goal of …
Are you thinking of selling monthly covered calls for weekly or monthly income? If so, you came to the right place. Of course, if you landed here by accident, this article is sure to surprise you. As of , selling covered calls is still one of the most conservative income trading strategies that investors use …
Selling Covered Calls For Monthly Income: Easily Read More »
For most asset classes, trading volatility is relatively straightforward. All it takes is to observe the asset’s price change over time and determine a suitable buy point and sell point. However, for options trading, volatility isn’t that simple. This is because options traders do not directly buy the security; instead, they purchase a derivative contract …
Wondering what’s the best strategy for selling put options? Retirement is a subject that is on the minds of pretty much everyone; one day, we all hope to have enough assets saved up so that we will no longer have to work. Of course, accumulating assets for retirement is only half the story. Once we …
What Is The Best Strategy For Selling Put Options? Read More »
Wondering how to sell credit spreads profitably? Have you tried to sell options but got frustrated at how much money or margin you need in your account? If you want to sell put options, say on Tesla, you’ll need to be able to buy 100 shares of tesla before you can even start selling options …
How To Sell Credit Spreads: Bull Puts & Bear Calls Explained Read More »
Are you thinking of selling put options for weekly or monthly income? If so, you came to the right place. Selling put options is different than selling covered calls, however, both carry about the same risk, and are safe ways to generate income. But, what if you wanted to generate weekly or monthly income from equities …
Selling Weekly or Monthly Put Options for Income Read More »
The current yield on the S&P 500 is hovering at an anemic 1.30%, hardly ideal for investors who rely on yield. Selling puts on a stock you want to own is one way to generate an income using options. What is a cash-secured Put? A cash-secured put involves writing an at-the-money or out-of-the-money put option …
Are you a dividend investor? What if I told you there was a way to double, or even triple your income without incurring much risk. In this article, I’ll introduce you to 5 covered call trade ideas on quality companies – dividend aristocrats that will do just that. I’ve organized the trade ideas from the …
5 Covered Call Trade Ideas – Target 5% By Oct 8, 2021 Read More »
Apple (NASDAQ:AAPL) shares are struggling alongside the rest of the equities market. The tech giant’s size, fantastic fundamentals, and cash hoard have meant little in the face of such indiscriminate selling. While the reasons for the recent rug pull vary, the takeaway is clear. The daily uptrend in AAPL stock is broken, and bulls are …
Stay in Touch With Us
Get latest from The Financially Independent Millennial in our Friday Newsletter
