FinancialShot.com

We have demonstrated how well options function in unison with a
stock position. They enhance potential gains and provide profit
protection. They enable us to manage specific risk in a single
stock as well as an entire portfolio. But, as good as options
are in conjunction with stocks, they can be even better when
traded against each other.

There are many option strategies that do not involve the use of
any security other than another option, like spreads, straddles
and strangles, for example.

A spread involves the purchase of one option in conjunction with
the sale of another option. There are many types of spreads.
Some take advantage of stock movements while others are set up
to take advantage of implied volatility movements. Some are even
designed to take advantage of a stock staying still. There are
vertical spreads, calendar or time spreads, diagonal spreads and
ratio spreads just to name a few. Spreads can provide large
percentage returns with low risk and can be entered into with
small capital outlay.

Straddles involve the buying (long) or selling (short) of a call
and a put (usually at-the-money) in the same stock, in the same
expiration month, and the same strike.

Strangles involve the buying (long) or selling (short) of an
out-of-the-money call and an out-of-the-money put in the same
stock and in the same expiration month.

These are both trades in which you can take advantage of stock
or volatility movements (in the case of being long) or lack of
stock or volatility movements (in the case of being short)
during the period of time until expiration. Both straddles and
strangles are considered premium precision plays.

These trades are considered more advanced and sophisticated than
the strategies previously discussed in this course. Certain
spreads, such as 1 to 1 vertical spreads, can actually be less
risky than some of the strategies discussed above, but spreads
generally do have more variables to consider, and this makes
them more difficult to trade.

The straddles and strangles sometimes involve much more risk and
many more variables to take into consideration. So, these trades
are considered very sophisticated and should not be entered into
by untrained novices.

For this reason, we will not be covering these strategies in
more detail here, but will be introducing them to you in our
members’ area and in future releases - once you have had time to
master your option basics.

Amazing Options Trading Strategies For Safer Investing
and Explosive Profits. Discover how to protect your
investments with the leveraged power of options. Step
by step video tutorials show you how. Click here now:
options-university.com options-university.com