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?)
List of Trading Movies, Documentaries, and TV Shows.
If you like trading shows and movies, here's a list to work though.
If you enjoy movies, TV shows and documentaries about traders and trading, here's an extensive list to watch. The list is categorized into movies, documentaries, TV shows and "Others."
Trader and Trading Movies.
Movies about trading and traders. Some based more on facts and real events than others.
Rogue Trader (1999) - The story of the Nick Leeson, the trader who brought down Barings Bank by hiding trading losses.
Wall Street (1987) - The story of an eager young broker who convinces a mogul corporate raider to mentor him. with problematic results.
Wall Street: Money Never Sleeps (2010) - The once-mogul now must find his way back to the top of the finance world after being imprisoned for insider trading.
Boiler Room (2000) - A "chop shop," where brokers sell fake or worthless stock to an unsuspecting public, and make fortunes doing it.
The Wolf of a Wall Street (2013) - The mostly true story of Jordan Belfort, who began as a penny stock salesman on his way to creating a massive brokerage firm. which was funded by defrauding investors.
Margin Call (2011) - When massive risk is discovered that could bring down an investment bank, the firm takes action to hopefully avoid catastrophe.
The Pursuit of Happyness (2006) - A man with no prospects gets a job as an intern stock broker, and it changes his life for the better.
Pi (1998) - A man goes a little crazy trying to predict patterns in the stock market.
Trading Places (1983) - A comedic look at trading, and how a 'nobody' can rise in the ranks of finance.
Dealers (1989) - The wheeling and dealing lifestyle of the people on a London trading floor.
The Bank (2001) - A mathematician at a "greed is good" bank devises a way to predict stock moves.
Trader and Trading Documentaries.
Documentaries about trading and trader, taking a look at actual events that have occurred.
Cancel Crash (2012) - A documentary about the 1987 stock market crash, from the perspective of the traders who were there, and the traders who stepped in to buy when literally no one else would.
Floored: Into the Pit (2009) - The life of traders in the dwindling Chicago trading pits.
The Pit (2010) - Focusing on the traders of NYBOT.
Inside Job (2010) - Academy Award for Best Documentary Feature focusing on the 2008 financial crisis.
Billion Dollar Day (1985) - This documentary follows three currency traders from New York, London and Hong Kong.
Black Wednesday (1997) - The crash of the British pound sterling in 1992.
Enron: The Smartest Guys in the Room (2005) - The rise and fall of Enron, and the management and traders who caused it.
The Ascent of Money (2008) - The history of money and financial markets.
Capitalism: A Love Story (2009) - Examines how the quest for corporate profits overshadows doing what is right.
The Midas Formula: Trillion Dollar Bet (1999) - The rise and fall of LTCM, a firm that bet on a financial equation to bring them riches.
The Last Days of Lehman Brothers (2009) - Docudrama on the events that transpired in the final days before Lehman failed.
Trader (1987) - A documentary about Paul Tudor Jones, founder of Tudor Investment Corporation. The documentary is out there, but hard to find.
Mind Over Money (2010) - Explores why economists failed to predict the 2008 financial crisis.
Golman Saches: Power and Peril (2010) - A look into the financial giant and its corporate culture.
Too Big to Fail (2011) - Docudrama on the 2008 financial crisis and fall of Lehman Brothers.
Quants: The Alchemists of Wall Street (2010) - The men and woman crunching the numbers for financial and trading algorithms.
Super Rich: The Greed Game (2008) - How various people have made their fortunes.
The Warning (2009) - How one woman tried to sound the warning bell before the financial crisis hit, but no one listened.
Trader and Trading TV Shows.
Shows about traders and trading.
Some are based on reality, while others are fictitious and for entertainment purposes only.
American Greed (2007 to current) - A CNBC show featuring scams and con artists who bilk investors out of millions, often through trading schemes.
Billions (2016) - An HBO show where a US attorney and hedge fund king collide.
Million Dollar Traders (2009) - A short-lived reality show on the BBC that attempted to turn normal people into traders.
Traders (1996-2000) - A Canadian show taking you behind the scenes of a fictional investment bank and onto the trading floor.
Wall Street Warriors (2006-2009) - Examines the lives and jobs of the people who make their money in the financial markets.
Other Trading and Trader Movies.
This section includes foreign trading movies or documentaries, as well as shows that are only slightly related to trading and traders.
Gold (2016) - Based on a true story, this movie follows a gold prospector who takes a company public and is a booming success for a time, until the truth about what is going on is revealed.
A Good Year (2006) - The movie starts out following a London trader, before he heads off to deal with his uncle's estate.
Capital (2012) - French film about a European bank fighting a US hedge fund takeover.
Limit Up (1989) - A floor runner starts getting trading tips from an angel..or is it a devil?
Other People's Money (1991) - The story of a corporate raid.
Owning Mahowny (2003) - A bank employee embezzles millions to fuel a gambling addiction.
Quicksilver (1986) - A trader loses everything, becomes a bike messenger, but then returns to the markets.
The Scam (2009) - South Korean film about a person who loses everything, but then makes a fortune in the stock market. The fortune upsets a large a scam in progress though, and results in repercussions.
Silver Bears (1978) - A silver mine and Swiss bank are acquired, by crooks.
Stavisky (1974) - French film on a financial consultant and embezzler.
The Bonfire of the Vanities (1990) - The lives and misdeeds of New Yorkers, including a Wall Street trader.
Limitless (2011) - A pill enhances a writer's mental abilities, and he uses those abilities to make money in the financial markets.
Barbarians at the Gate (1993) - Docudrama on the leveraged buyout of RJR Nabisco.
Arbitrage (2012) - A New York fund manger faces business and personal problems.
Working Girl (1988) - A sectary teams up with an investment banker to work on a big deal.
Final Word on Trading Movies.
There are lots of trading movies, documentaries and shows out there. Hopefully this list provides you with some titles you weren't aware of and can now watch. There are also loads of interesting financial documentaries available on YouTube and other video sites.
There are always new trading movies, trading TV shows and trading documentaries being put out, so watch for updates on this list.
Trade Show Booths That Bring Success.
Today, trade shows are much more than setting up a standard trade show exhibit display and working the show. It's about standing apart from the competition with custom exhibits that inform, excite and stand out in the mind of your customers. Your brand awareness relies on the success of your trade show and how the customers interact with you. At Exhibit Options, we offer an extensive array of trade show displays created by exhibit fabricators and exhibition stand builders to help you create the perfect display for your needs.
Full-Service Trade Show Exhibits and Management.
With 15+ years of experience creating tradeshow exhibits and displays, Exhibit Options is a full-service exhibit designer, fabricator, and installer. We can handle every aspect of trade show management from start to finish. Custom designs—for rent or purchase Lowest prices—we beat our competitors Fast service.
Stand apart from the competition.
Strategize Your.
Trade Show Display With.
Whether you are taking your trade show displays on the road to several trade shows or you are participating in one trade show, our display fabrication services can help you create the perfect display to fit within your strategy. If you will be on the road, tabletop displays are a great option. Portable does not mean boring; your portable trade show exhibit display can still be customized with our exhibit design, complete with lighting, shelves and monitor mounts to give your trade show exhibit display the edge on your competition.
Custom Trade Show.
If you have specific needs that standard trade show exhibits will not satisfy, Exhibit Options is proud to provide you with the highest quality custom trade show displays. Meeting every need with the utmost precision, our unique building methods provide you with a trade show display that is worlds apart from the rest. We offer:
Modular Exhibits Portable Banner Stands Tension Fabric Displays Truss Displays.
Trade Show Booth.
You can also choose trade show display rentals to decrease your cost and responsibility for storing, insuring and maintaining your display.
When you rent your trade show exhibits for your exhibit booth such as truss rentals, you have the ability to try out different techniques at each show to find out what works best before making the investment for a large display.
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