Options Strategies

Options Strategies

Before we buy or sell options we need a strategy, and before we choose an options strategy, we need to understand how we want options to work in our portfolio. A particular strategy is successful only if it performs in a way that helps us meet our investment goals.

Simple options strategies are usually the way to begin investing with options. By mastering simple strategies, you'll prepare yourself for advanced options trading. In general, the more complicated options strategies are appropriate only for experienced investors.

Once you've decided on an appropriate options strategy, it's important to stay focused. That might seem obvious, but the fast pace of the options market and the complicated nature of certain transactions make it difficult for some inexperienced investors to stick to their plan. If it seems that the market or underlying security isn't moving in the direction you predicted, it's possible that you'll minimize your losses by exiting early. But it's also possible that you'll miss out on a future beneficial change in direction. That's why many experts recommend that you designate an exit strategy or cut-off point ahead of time, and hold firm. For example, if you plan to sell a covered call, you might decide that if the option moves 20% in-the-money before expiration, the loss you'd face if the option were exercised and assigned to you is unacceptable. But if it moves only 10% in-the-money, you'd be confident that there remains enough chance of it moving out-of-the-money to make it worth the potential loss.

1Let us now proceed towards understanding strategy. The strategies are explained in very structured manner and in a way easy to understand. strategies are classified in a various way depending on its usage and the way the strategy is formed.

Here are Some Types of options strategies you can trade in.

1. Bullish strategies

2. Bearish strategies

3. Volatile Strategies

4. Range Bound strategies

5. Arbitrage strategies

Running Option strategies is Same Like Driving a Car