10 Options Strategies to Know.
10 Options Strategies To Know.
Too often, traders jump into the options game with little or no understanding of how many options strategies are available to limit their risk and maximize return. With a little bit of effort, however, traders can learn how to take advantage of the flexibility and full power of options as a trading vehicle. With this in mind, we've put together this slide show, which we hope will shorten the learning curve and point you in the right direction.
10 Options Strategies To Know.
Too often, traders jump into the options game with little or no understanding of how many options strategies are available to limit their risk and maximize return. With a little bit of effort, however, traders can learn how to take advantage of the flexibility and full power of options as a trading vehicle. With this in mind, we've put together this slide show, which we hope will shorten the learning curve and point you in the right direction.
1. Covered Call.
Aside from purchasing a naked call option, you can also engage in a basic covered call or buy-write strategy. In this strategy, you would purchase the assets outright, and simultaneously write (or sell) a call option on those same assets. Your volume of assets owned should be equivalent to the number of assets underlying the call option. Investors will often use this position when they have a short-term position and a neutral opinion on the assets, and are looking to generate additional profits (through receipt of the call premium), or protect against a potential decline in the underlying asset's value. (For more insight, read Covered Call Strategies For A Falling Market.)
2. Married Put.
In a married put strategy, an investor who purchases (or currently owns) a particular asset (such as shares), simultaneously purchases a put option for an equivalent number of shares. Investors will use this strategy when they are bullish on the asset's price and wish to protect themselves against potential short-term losses. This strategy essentially functions like an insurance policy, and establishes a floor should the asset's price plunge dramatically. (For more on using this strategy, see Married Puts: A Protective Relationship . )
3. Bull Call Spread.
In a bull call spread strategy, an investor will simultaneously buy call options at a specific strike price and sell the same number of calls at a higher strike price. Both call options will have the same expiration month and underlying asset. This type of vertical spread strategy is often used when an investor is bullish and expects a moderate rise in the price of the underlying asset. (To learn more, read Vertical Bull and Bear Credit Spreads.)
4. Bear Put Spread.
The bear put spread strategy is another form of vertical spread​ like the bull call spread. In this strategy, the investor will simultaneously purchase put options at a specific strike price and sell the same number of puts at a lower strike price. Both options would be for the same underlying asset and have the same expiration date. This method is used when the trader is bearish and expects the underlying asset's price to decline. It offers both limited gains and limited losses. (For more on this strategy, read Bear Put Spreads: A Roaring Alternative To Short Selling.)
Investopedia Academy "Options for Beginners"
Now that you've learned a few different options strategies, if you're ready to take the next step and learn to:
Improve flexibility in your portfolio by adding options Approach Calls as down-payments, and Puts as insurance Interpret expiration dates, and distinguish intrinsic value from time value Calculate breakevens and risk management Explore advanced concepts such as spreads, straddles, and strangles.
5. Protective Collar.
A protective collar strategy is performed by purchasing an out-of-the-money put option and writing an out-of-the-money call option at the same time, for the same underlying asset (such as shares). This strategy is often used by investors after a long position in a stock has experienced substantial gains. In this way, investors can lock in profits without selling their shares. (For more on these types of strategies, see Don't Forget Your Protective Collar and How a Protective Collar Works.)
6. Long Straddle.
A long straddle options strategy is when an investor purchases both a call and put option with the same strike price, underlying asset and expiration date simultaneously. An investor will often use this strategy when he or she believes the price of the underlying asset will move significantly, but is unsure of which direction the move will take. This strategy allows the investor to maintain unlimited gains, while the loss is limited to the cost of both options contracts. (For more, read Straddle Strategy A Simple Approach To Market Neutral . )
7. Long Strangle.
In a long strangle options strategy, the investor purchases a call and put option with the same maturity and underlying asset, but with different strike prices. The put strike price will typically be below the strike price of the call option, and both options will be out of the money. An investor who uses this strategy believes the underlying asset's price will experience a large movement, but is unsure of which direction the move will take. Losses are limited to the costs of both options; strangles will typically be less expensive than straddles because the options are purchased out of the money. (For more, see Get A Strong Hold On Profit With Strangles.)
8. Butterfly Spread.
All the strategies up to this point have required a combination of two different positions or contracts. In a butterfly spread options strategy, an investor will combine both a bull spread strategy and a bear spread strategy, and use three different strike prices. For example, one type of butterfly spread involves purchasing one call (put) option at the lowest (highest) strike price, while selling two call (put) options at a higher (lower) strike price, and then one last call (put) option at an even higher (lower) strike price. (For more on this strategy, read Setting Profit Traps With Butterfly Spreads . )
9. Iron Condor.
An even more interesting strategy is the iron condor. In this strategy, the investor simultaneously holds a long and short position in two different strangle strategies. The iron condor is a fairly complex strategy that definitely requires time to learn, and practice to master. (We recommend reading more about this strategy in Take Flight With An Iron Condor, Should You Flock To Iron Condors? and try the strategy for yourself (risk-free!) using the Investopedia Simulator.)
10. Iron Butterfly.
The final options strategy we will demonstrate here is the iron butterfly. In this strategy, an investor will combine either a long or short straddle with the simultaneous purchase or sale of a strangle. Although similar to a butterfly spread, this strategy differs because it uses both calls and puts, as opposed to one or the other. Profit and loss are both limited within a specific range, depending on the strike prices of the options used. Investors will often use out-of-the-money options in an effort to cut costs while limiting risk. (To learn more, read What is an Iron Butterfly Option Strategy?)

Options strategies with riskless techniques

Get via App Store Read this post in our app!
Is there a good options strategy that has a fairly low risk?
Is there a good options strategy that has a fairly low risk? It doesn't matter if it's complicated, has several legs, and requires margin.
Check out this site:
If you have a background in math or eco or are comfortable with graphs, I suggest you graph the payoffs of each of these strategies. It will really help you understand it. If you need help with this, let me know and I can draw a couple out for you.
Your question is rather vague but also complicated however I will try to answer it. First off, many investors buy options to hedge against a current position in a stock (already own the stock). But you can also try to make money off of options rather than protecting yourself.
Let's suppose you anticipate that a stock will increase in value so you want to capitalize on this. Suppose further that you have a small amount of money to invest, say $100. Suppose the stock is currently at $100 so that you can only afford 1 share. Suppose there is a call option out there with strike $105 that costs you only $1.
Let's compare two scenarios:
Buy 1 share of the stock ($100) Buy (aka going long) 100 call options ($100).
The stock increases to $120 at the maturity date of the option.
You have made $20 You have made ($120 - $105) x 100 = $15 x 100 = $1,500.
So, you made a lot more money with the same initial investment. The amount of money you put in is small (i. e. can be perceived as low risk). However, if the stock price ended up being $104.90 then your options are worthless (i. e. can be perceived as high risk).
You may look into covered calls. In short, selling the option instead of buying it . playing the house.
One can do this on the "buying side" too, e. g. let's say you like company XYZ. If you sell the put, and it goes up, you make money. If XYZ goes down by expiration, you still made the money on the put, and now own the stock - the one you like, at a lower price. Now, you can immediately sell calls on XYZ. If it doesn't go up, you make money. If it does goes up, you get called out, and you make even more money (probably selling the call a little above current price, or where it was "put" to you at).
The greatest risk is very large declines, and so one needs to do some research on the company to see if they are decent -- e. g. have good earnings, not over-valued P/E, etc. For larger declines, one has to sell the call further out. Note there are now stocks that have weekly options as well as monthly options. You just have to calculate the rate of return you will get, realizing that underneath the first put, you need enough money available should the stock be "put" to you.
An additional, associated strategy, is starting by selling the put at a higher than current market limit price. Then, over a couple days, generally lowering the limit, if it isn't reached in the stock's fluctuation. I. e. if the stock drops in the next few days, you might sell the put on a dip. Same deal if the stock finally is "put" to you. Then you can start by selling the call at a higher limit price, gradually bringing it down if you aren't successful -- i. e. the stock doesn't reach it on an upswing.
My friend is highly successful with this strategy.
There isn't really a generic options strategy that gives you higher returns with lower risk than an equivalent non-options strategy. There are lots of options strategies that give you about the same returns with the same risk, but most of the time they are a lot more work and less tax-efficient than the non-options strategy.
When I say "generic" I mean there may be strategies that rely on special situations (analysis of market inefficiencies or fundamentals on particular securities) that you could take advantage of, but you'd have to be extremely expert and spend a lot of time. A "generic" strategy would be a thing like "write such-and-such sort of spreads" without reference to the particular security or situation.
As far as strategies that give you about the same risk/return, for example you can use options collars to create about the same effect as a balanced fund (Gateway Fund does this, Bridgeway Balanced does stuff like it I think); but you could also just use a balanced fund. You can use covered calls to make income on your stocks, but you of course lose some of the stock upside. You can use protective puts to protect downside, but they cost so much money that on average you lose money or make very little. You can invest cash plus a call option, which is equivalent to stock plus a protective put, i. e on average again you don't make much money.
Options don't offer any free lunches not found elsewhere. Occasionally they are useful for tax reasons (for example to avoid selling something but avoid risk) or for technical reasons (for example a stock isn't available to short, but you can do something with options).
No. The more legs you add onto your trade, the more commissions you will pay entering and exiting the trade and the more opportunity for slippage. So lets head the other direction.
Can we make a simple, risk-free option trade, with as few legs as possible?
The (not really) surprising answer is "yes", but there is no free lunch, as you will see.
According to financial theory any riskless position will earn the risk free rate, which right now is almost nothing, nada, 0%.
Let's test this out with a little example.
In theory, a riskless position can be constructed from buying a stock, selling a call option, and buying a put option. This combination should earn the risk free rate. Selling the call option means you get money now but agree to let someone else have the stock at an agreed contract price if the price goes up. Buying the put option means you pay money now but can sell the stock to someone at a pre-agreed contract price if you want to do so, which would only be when the price declines below the contract price.
To start our risk free trade, buy Google stock, GOOG, at the Oct 3 Close:
495.52 x 100sh = $49,552.
The example has 100 shares for compatibility with the options contracts which require 100 share blocks.
we will sell a call and buy a put contract price of $500 for Jan 19,2013.
Therefore we will receive $50,000 for certain on Jan 19,2013, unless the options clearing system fails, because of say, global financial collapse, or war with Aztec spacecraft.
According to google finance, if we had sold a call today at the close we would receive the bid, which is 89.00/share, or $8,900 total. And if we had bought a put today at the close we would pay the ask, which is 91.90/share, or $9190 total.
So, to receive $50,000 for certain on Jan 19,2013 we could pay $49,552 for the GOOG stock, minus $8,900 for the money we received selling the call option, plus a payment of $9190 for the put option we need to protect the value. The total is $49,842.
If we pay $49,842 today, plus execute the option strategy shown, we would have $50,000 on Jan 19,2013. This is a profit of $158, the options commissions are going to be around $20-$30, so in total the profit is around $120 after commissions.
On the other hand,
$50,000 in a bank CD for 12 months at 1.1% will yield $550 in similarly risk-free interest.
Given that it is difficult to actually make these trades simultaneously, in practice, with the prices jumping all around, I would say if you really want a low risk option trade then a bank CD looks like the safer bet.
This isn't to say you can't find another combination of stock and contract price that does better than a bank CD -- but I doubt it will ever be better by very much and still difficult to monitor and align the trades in practice.
By coincidence, I entered this position today. Ignore the stock itself, I am not recommending a particular stock, just looking at a strategy. The covered call.
For this stock trading at $7.47, I am able, by selling an in-the-money call to be out of pocket $5.87/sh, and am obliged to let it go for $7.00 a year from now. A 19% return as long as the stock doesn't drop more than 6% over that time. The chart below shows maximum profit, and my loss starts if the stock trades 21% below current price.
The risk is shifted a bit, but in return, I give up potential higher gains. The guy that paid $1.60 could triple his money if the stocks goes to $12, for example. In a flat market, this strategy can provide relatively high returns compared to holding only stocks.

Creating Option Combinations.
Buying and selling calls and puts together gives you the ability to create powerful trading positions.
Option strategies put you in control of defining specific price points to target. Go ahead and browse through a few examples of what's possible when using options to trade.
When you market prices to increase but want to limit your total exposure.
When you want market prices to decrease but still want some gains on the upside.
When you want the market to either stay stable or explode in either direction.
Option Strategies.
Generally, an Option Strategy involves the simultaneous purchase and/or sale of different option contracts, also known as an Option Combination. I say generally because there are such a wide variety of option strategies that use multiple legs as their structure, however, even a one legged Long Call Option can be viewed as an option strategy.
Under the Options101 link, you may have noticed that the option examples provided have only looked at taking one option trade at a time. That is, if a trader thought that Coca Cola's share price was going to increase over the next month a simple way to profit from this move while limiting his/her risk is to buy a call option. Of course, s/he could also sell a put option.
But what if s/he bought a call and a put option at the same strike price in the same expiry month? How could a trader profit from such a scenario? Let's take a look at this option combination;
In this example, imagine you bought (long) 1 $40 July call option and also bought 1 $40 July put option. With the underlying trading at $40, the call costs you $1.14 and the put costs $1.14 also.
Now, when you're the option buyer (or going long) you can't lose more than your initial investment. So, you've outlaid a total of $228, which is you're maximum loss if all else goes wrong.
But what happens if the market rallies? The put option becomes less valuable as the market trades higher because you bought an option that gives you the right to sell the asset - meaning for a long put you want the market to go down. You can look of a long put diagram here.
However, the call option becomes infinitely valuable as the market trades higher. So, after you break away from your break even point your position has unlimited profit potential.
The same situation occurs if the market sells off. The call becomes worthless as trades below $37.72 (strike of $40 minus what you paid for it - $2.28), however, the put option becomes increasingly profitable.
If the market trades down 10%, and at expiry, closes at $36, then your option position is worth $1.72 ($172). You lose the total value of the call, which was priced at $1.14 and cost $114, however, the put option has expired in the money and is worth $4.00 an option - or $400. Subtract from this the total amount paid for the position, $228 and now the position is worth $172. This means that you will exercise your right and take possession of the underlying asset at the strike price.
This means that you will effectively be short the underlying shares at $40. With the current price in the market trading at $36, you can buy back the shares and make an instant $4.00 per share for a total net profit of $286 per share on the put leg. Then subtract the other $114 for the call leg and your total net profit is $172.
That might not sound like much, but consider what your return on investment is. You outlaid a total $228 and made $172 in a one month period. That's a 75% return in a one month period with a known maximum risk and unlimited profit potential.
This is just one example of an option combination. There are many different ways that you can combine option contracts together, and also with the underlying asset, to customize your risk/reward profile.
You've probably realized by now that buying and selling options requires more than just a view on the market direction of the underlying asset. You also need to understand and make a decision on what you think will happen to the underlying asset's volatility. Or more importantly, what will happen to the implied volatility of the options themselves.
If the market price of an option contract implies that it is 50% more expensive than the historical prices for the same characteristics, then you may decide against buying into this option and hence make a move to sell it instead.
But how can you tell if an options implied volatility is historically high?
Well, the only tool that I know of that does this well is the Volcone Analyzer. It analyzes any option contract and compares it against the historical averages, while providing a graphical representation of the price movements through time - know as the Volatility Cone. A great tool to use for price comparisons.
Anyway, for further ideas on option combinations, take a look at the navigation in the side bar and see what strategy is right for you.
Bullish Spreads Long Call Short Put Long Synthetic Call Backspread Call Bull Spread Put Bull Spread Covered Call Protective Put Collar Bearish Spreads Short Call Long Put Short Synthetic Put Backspread Call Bear Spread Put Bear Spread Neutral Spreads Iron Condor Long Straddle Short Straddle Long Strangle Short Strangle Long Guts Short Guts Call Time Spread Put Time Spread Call Ratio Vertical Spread Put Ratio Vertical Spread Long Call Butterfly Short Call Butterfly Long Put Butterfly Short Put Butterfly.
Comments (103)
Peter December 6th, 2016 at 7:19pm.
Luciano December 6th, 2016 at 7:22am.
Peter December 1st, 2016 at 5:15pm.
Luciano December 1st, 2016 at 8:48am.
Peter November 18th, 2015 at 3:59pm.
Hi Renee, yes they are already added as either long or short i. e. Long Straddle and Long Strangle.
Renee November 17th, 2015 at 8:55pm.
Could add Strangle or Straddle?
Igwe Zachary Githaiga March 30th, 2014 at 3:35am.
so, what are the strategies in option trading.
bee February 25th, 2014 at 4:05pm.
If I've actually short a stock and it now is trading higher, is there any option repair strategy I can use to limit my loss? Most option repair strategy only gives example starting out with a long position on a stock.
Peter December 3rd, 2013 at 2:52am.
Aplogogies for the delayed response!
Terry B November 25th, 2013 at 5:21pm.
Hello, just downloaded your spreadhseet. Awesome stuff.
a) For the default model stock price of $25.
I noticed that the at the money calls were at .52.
and the at the money puts were at -.48.
Also, I came across a site that post's historical volatilities for a stock.
1mo, 2 mo, 3mo, 6mo, 1yr, 2 yr, and 3yr.
Jayant October 15th, 2013 at 12:23am.
Dear admin can u suggest me any new strategy except these strategies..i want some new strategy, m well known all this strategies because m the trainer of options market in kolkata and m also certified with NSE.
Peter August 26th, 2013 at 6:18pm.
Steve August 26th, 2013 at 7:33am.
What exactly is the pink line in the diagrams? It appears to be some average over time but I can't find a definition anywhere.
alvaro frances April 15th, 2012 at 5:03pm.
Amit Bhutani hello, please can you explain the strategies that spelling on March 17, 2012 the day that I describe below, thanks.
2) Combo corto + largo Nifty 2)Short Combo + Nifty Long.
3) Put / Call Ratio spreed 3)Put / Call Ratio spreed.
4) Coloque el oso spreed / Spreed Bull de llamadas. 4)Put bear spreed / Call Bull Spreed.
Peter March 27th, 2012 at 5:05pm.
James March 27th, 2012 at 7:02am.
Hi I've used the Option Trading Workbook. xls and compared it to bloomberg valuations and it is slightly out. Specifically I'm talking about american options on the ES mini contract, eg ESU2C 1350 Index.
Peter March 26th, 2012 at 7:47pm.
Amit S Bhuptani March 17th, 2012 at 1:12pm.
2)Short Combo + Nifty Long.
3)Put / Call Ratio spreed.
4)Put bear spreed / Call Bull Spreed.
Amit S Bhuptani.
Rakesh March 17th, 2012 at 10:38am.
Peter February 26th, 2012 at 4:44pm.
Mmm, that's a tough question to answer here Rakesh ;-) I'd say your best bet would be to invest in a program like MultiCharts . MultiCharts can chart, scan and auto-trade stocks through many different brokers. Plus, it provides an easy to use scripting language that allows you to design and backtest trading ideas before risking real money. I have it and love it!
Rakesh February 26th, 2012 at 11:36am.
Peter February 23rd, 2012 at 5:17pm.
Joel H. February 23rd, 2012 at 8:58am.
I just finished reading a book on options and one of the discussion points was that an ATM call will always have a higher premium than a put at the same strike. If I find a put which has a higher premium then a call at the same strike price, is this unusual? Is there a way to take advantage of such a situation? Is it fair to assume that this is a temporary situation? Thanks in advance.
Peter February 23rd, 2012 at 2:28am.
Ash February 23rd, 2012 at 1:39am.
Hi Peter, I have a question on when to close out my position on a call option. I currently have a April call option and i wanted to know if there are any best practices around when to closeout your position if you are not planning on purchasing the stock at expiry?. I am asking this because as time goes by the price of options go down. It is end of feb now and my options expire in Apr. Your input is appreciated.
Peter February 19th, 2012 at 5:04pm.
Rakesh February 19th, 2012 at 8:59am.
Peter February 12th, 2012 at 5:09pm.
Peter February 12th, 2012 at 3:48pm.
Short Put: worthless.
Short Call: -2,000.
eh February 11th, 2012 at 3:48am.
Short 1 lot, Strike Price 1050, Index CALL at 25.
Short 1 lot, Strike Price 1100, Index PUT at 30.
Varun February 10th, 2012 at 1:22am.
Considering that i am bullish on the market and would like to take a profit from it.
so the person to whom i am selling would not be excecising his option and i would be able to make money.
danielyee December 22nd, 2011 at 7:08am.
Peter December 21st, 2011 at 3:52pm.
You should be able to see the last price - even if the market is closed.
danielyee December 21st, 2011 at 4:38am.
Thanks and when I click e. g AAPL per contract value N/A.
Peter December 20th, 2011 at 5:05pm.
You can take a look at the option prices on Yahoo.
danielyee December 20th, 2011 at 5:15am.
Peter December 18th, 2011 at 3:52pm.
Jorge December 16th, 2011 at 4:35pm.
Peter September 29th, 2011 at 12:15am.
You won't be able to roll over at the same price - if you want to keep a position in the same strike price, you will have to sell (buy) out of the front month contract and buy (sell) into the back month at the current market prices.
Ankur September 29th, 2011 at 12:00am.
Thanks Peter. Further, if I need to rollover my position to next month, then do I need to pay some extra premium or can I rollover at the same price?
Peter September 28th, 2011 at 6:04pm.
Yes, exactly. You would close your position for a profit without having to wait until expiration to exercise the option.
Ankur September 28th, 2011 at 8:00am.
Peter September 18th, 2011 at 11:37pm.
Risk-free? Me too, please let me know when you find such strategies ;-)
aparna September 18th, 2011 at 11:34pm.
I want to learn risk-free option trading in Indian market. Suggest me some website for it.
NAGESH September 4th, 2011 at 11:30am.
First time I found more information about options. Thanks a lot.
Peter August 3rd, 2011 at 5:55pm.
Both futures and stocks have a delta of 1 so hedging with a future is much the same as hedging with a stock.
Raj baghel August 3rd, 2011 at 1:08am.
is there any help for hedging in future with respect to call/put.
Peter August 1st, 2011 at 5:48pm.
Please see the in-the-money page.
Arul August 1st, 2011 at 7:02am.
what is in the money call & put?
Peter May 12th, 2011 at 11:05pm.
Hi spinnerrobert, yes, you can exit an option position at any time prior to the expiraton date.
Peter May 12th, 2011 at 11:04pm.
Hi Azaragoza, you can check out my option pricing spreadsheet for the formula.
spinnerrobert May 12th, 2011 at 8:29pm.
My qestion is let say i own akam and buy option for either put or call. I want to sell it right after i purchase the contract let say within one hour. Is that allow?
azaragoza May 5th, 2011 at 3:15pm.
what is the formula you use to optain the PnL charts, do you have an example?
Peter February 28th, 2011 at 3:05am.
Hi Jai, it really depends on what market you're looking at and what your view is of this market i. e is it trending upwards, is there a lot of volatility etc?
Jai February 24th, 2011 at 11:14pm.
S. Vivek February 7th, 2011 at 4:48am.
can you tell me short on options and how its works ?
UOG December 13th, 2010 at 1:26pm.
Hello, I think your blog is epic. Congrats.
Peter December 7th, 2010 at 1:25am.
You'd need to check with your if they can provide this service. I know that Interactive Brokers provide an API to plug external systems into that operates over the Internet.
DAJB December 6th, 2010 at 3:38pm.
Peter October 31st, 2010 at 3:53am.
Anonymous October 29th, 2010 at 10:16pm.
I am using Thinkorswim. I haven't seen about premium. So, I am wondering that what the differences between "premium" and "commission" are?
I bought long call GLD at 128 and expire Oct 2010, I got info from Thinkorswim; max profit = infinite, max loss = 30(not including possible dividend risk), cost of trade including commissions = 30+2.95 = 32.95.
My question are;
1. If the strike price expired Oct 31, 2010 is 125, how much would I loss (30 or 2.95 or 32.95)
2. Before the end of expiration, I thought that the market would go down. Which one should I pick between "sell it before expiration" or "do nothing in order to let it expired." How much does it cost of both of them?
3. If the strike price expired Oct 31,2010 is 130, what will happen if I do nothing and let it expired?
Peter October 21st, 2010 at 4:21am.
Depends on the country and what your main form of income is I'd say, whether the trade is treated as capital gains or income.
syrus October 21st, 2010 at 2:08am.
What is the tax liablity of a option trading when option is exercised. whether it will be profitable after payment of commission to broker and tax. is there any safe net to safeguard profit.
Peter October 18th, 2010 at 5:15pm.
Yes, you can surely exit an option position by trading out of it prior to the expiration date.
Kartik October 18th, 2010 at 8:03am.
This explaination talks about option in case of expiry but what in case of trade which takes place in between the expiry date.
Peter September 17th, 2010 at 2:26am.
Hi Meghna, just because there are no bids out there doesn't mean there aren't any buyers. You can just enter a sell order into the market and if the price is right a market maker will take it.
Meghna September 17th, 2010 at 2:19am.
Hi Peter, I know that i can reverse the position by selling in the same market. But in electronic trading generally bids are not available for deep ITM / OTM options, while in OTC market I can easily reverse the position by paying some what higher to the broker. Hence kindly clarify how to deel with such situation in e-trading like "Indian Nifty".
Peter September 15th, 2010 at 6:39am.
Yep, you can just reverse the option position by selling the same option contract in the option market.
Meghna September 15th, 2010 at 5:25am.
HI, Say if I am buying an in the money European option with an expiry of 4 months and If the option is deep ITM or OTM during at the end of 2nd month and if i want to crystallize my profits than is there any way out for it?
Peter September 5th, 2010 at 5:15am.
It's hard to beat Interactive Brokers on brokerage and platform functionality. Although I've heard that Think or Swim have a great platform also.
ramesh September 5th, 2010 at 12:32am.
Which firm has best trading tools and low commissions?
Peter September 2nd, 2010 at 5:55pm.
I use and can recommend Interactive Brokers. They are a US based company and you don't have to live in the US to open an account with them.
NaZZ September 2nd, 2010 at 7:02am.
I stay in Thailand(in Asia), how can I start to trade because I do not any account with any broker in USA. Can you suggest me broker's web site to open account and trade.
Peter August 29th, 2010 at 5:07pm.
Hi Sam, thanks for the feedback!
Sam August 29th, 2010 at 10:41am.
it's really nice website you have. Anyway, talking about options strategy , based on your experience, is it still useful using only simple long call or put ? because i heard that these are useless, mostly worthless.
Peter August 29th, 2010 at 5:44am.
Hi Rajesh, are you located in the US? If so, the following companies provide option courses and training;
rajashekargoud August 27th, 2010 at 12:11pm.
i am interested option please suggest me good insitituion for traning and from where i should start option(instial investments)and for dealing in option we should have any experiance.
Peter August 26th, 2010 at 12:31am.
Hi Raju, thanks for the feedback. if you have any other suggestions for the site, please let me know.
raju jee August 25th, 2010 at 9:59pm.
hi.. jst go thru ths site and m stant abut knowing option stategy. plz teach me more and CONGRAT 4 ur valuable meteriel.
Peter August 18th, 2010 at 6:57pm.
Hi Dale, HPQ is currently at 41.36 so your put options are ITM for the buyer, which means you're looking at being exercised and taking delivery of the stock at $45.
Dale Brooks August 18th, 2010 at 6:00pm.
I am short the hpq jan 12 45 put, what is a good stategy to limit my risk on the down side ? Should I go long the same put at the same strike ? Thank you Dale.
Peter August 14th, 2010 at 4:00pm.
Hi Amit, there are two firms that provide this kind of training;
Amit Sharma August 14th, 2010 at 2:06pm.
Want to learn Option Strategy with prctical Knowledge Contact : 9818759927, 9211663645.
Peter August 14th, 2010 at 6:28am.
shamsul idrisi August 13th, 2010 at 12:27pm.
i want to learn option trading please suggest me some good training center.
Peter August 6th, 2010 at 2:00am.
Interesting. do you know of a good place to source the put/call ratio numbers?
Brad August 6th, 2010 at 12:44am.
I think that the best overbought oversold indicator and a reversal signal is when lets say a stock is in an up trend than for a couple of days in bound-range.
the signal comes with a sudden PUT/CALL ratio change with a significant volume.
AUMKAR August 3rd, 2010 at 1:21pm.
What will be happen if the NIFTY STRAIT go 100+
anjanappa July 30th, 2010 at 2:04am.
call opt put optns strategies, i am very succsed in this field pl anybody try and earn get more money thank u.
Peter May 26th, 2010 at 12:57am.
No, OTC can mean a transaction between two parties for any type of financial instrument - even stocks can be traded OTC.
Maria May 25th, 2010 at 9:16am.
When somebody talks about OTC Commodities: does this only mean Commodities options?
Peter May 11th, 2010 at 6:34am.
It's where you buy/sell the underlying to reduce your delta exposure.
piyul May 7th, 2010 at 8:24am.
what is hedging stratges.
roshan March 27th, 2010 at 8:18am.
wat is option101.
Peter July 19th, 2009 at 8:18am.
Hi Yogesh, any strategy that has unlimited updside profit potential e. g. Long Straddle, which allows for unlimited profit if the stock trades up or down.
yogesh July 18th, 2009 at 5:11am.
which strategies use for give the more profit plz reply the answer.
priyal May 9th, 2009 at 4:25am.
for understanding option u have to read more books & be practical.
Vinesh May 6th, 2009 at 9:55pm.
Hi, i am Indian Investor and trader. I have just this website few days back and i want to tell you this is best site on Options Trading and imparting knowledge on the subject. Congratulations.
Admin December 8th, 2008 at 3:21am.
lisa Ascolese November 22nd, 2008 at 8:56am.
Who would I call if I wanted to trade options. Is this something that I could do online?
chandi November 12th, 2008 at 7:00am.
I want to know what r the Riskless Strategies in Option Trading. That will give money in any market condition.

Riskless Option Spreads.
When using put or call options to trade, we should always strive to make these gambles risk-free, since directional plays based on gut hunches are longshot bets. The simplest way to do this entails legging into bull or bear spreads so that the cost of the options one has sold short equals or exceeds the price one has paid for options bought. This produces a ‘credit’ spread. Obviously, it entails buying and selling the options at different times. In this lesson, we looked closely at how to do this, focusing on a riskless put spread in Yahoo! that had been recommended to subscribers.
Previous Wednesday Recorded Tutorial.
Trading the $500 Twitch.
By Brian Catalucci on August 18, 2013.
Stocks were falling when this lesson began, but we went cautiously against the trend in Google to come up with a winner that took all of three minutes to play out. Who cares about the trend when one can make $500 in just a few minutes by catching a small twitch up or down in a $900 stock? In an average day, Google probably twitches hundreds of times. You may be surprised at how easy it is to spot the nervous ups and downs that can deliver quick, painless profits.
Comments on this entry are closed.
Click here for a help page needed as a Hidden Pivot Graduate.
Click here for a special deal for graduates of the Hidden Pivot Course who want to stay on the cutting edge.
The consistent accuracy of Rick Ackerman’s forecasts is well known in the trading world, where his Hidden Pivot Method has achieved cult status. Rick’s proprietary trading/forecasting system is easy to learn, probably because he majored in English, not rocket science. Just one simple but powerful trick -- managing the risk of an ongoing trade with stop-losses based on ‘impulse legs’ – can be grasped in three minutes and put to profitable use immediately. Quite a few of his students will tell you that using ‘impulsive stops’ has paid for the course many times over.
Another secret Rick will share with you, “camouflage trading,” takes more time to master, but once you get the hang of it trading will never be the same. The technique entails identifying ultra-low-risk trade set-ups on, say, the one-minute bar chart, and then initiating trades in places where competition tends to be thin.
Most important of all, Rick will teach you how to develop market instincts (aka “horse sense”) by observing the markets each day from the fixed vantage point that only a rigorously disciplined trading system can provide.
The three-hour Hidden Pivot Course is offered live each month. If it’s more convenient, you can take it in recorded form at your leisure, as many times as you like. The course fee includes “live” trading sessions (as opposed to hypothetical ‘chalk-talk’) every Wednesday morning, access to hundreds of recorded hours of tutorial sessions, and access to an online library that will help you achieve black-belt mastery of Hidden Pivot trading techniques.
The next webinar will be held on Tuesday, January 23. Click below to register or get more information.
Yet Another Reason Why the Tax Bill Stinks to High Heaven.
Bitcoin Drama Obscures Ongoing Collapse of Market Volatility.
Should We Trust Bitcoin?
Wall Street Ponzi Scheme’s Biggest Challenge.
Bitcoin Mania’s ‘Secret Sauce’
Bitcoin Rampaging…Again.
Tax-Reform Hubris Reaches a Deafening Pitch.
Eyes on AMZN and the E-Mini S&Ps!
Here’s How Mr. Market Might Set Up the Kill Shot.
A FAANG Correction Worthy of the Name?
For technical support, billing or other questions Contact Rick's Picks.
Trading stocks, options and commodities can be very risky. Rick's Picks warnings and disclaimers.
Copyright © 2017 Hidden Pivot Enterprises. . All Rights Reserved.