Books on trading puts and calls


Bearish options strategies are the mirror image of bullish strategies. In other languages Add links. Diagonal or double diagonal spread. They are employed when the options trader expects the underlying stock price to move downwards.

From Wikibooks, open books for an open world. That limits profit potential. The option strategy where the middle two positions have different strike price is known as an Iron condor. They include the long straddle, long strangle, short condor and short butterfly.

The put acts as an insurance policy and limit losses to a minimal but adjustable amount. The purchase of one call books on trading puts and calls, and the sale of another. However all the long option positions are short and all the short option positions are long. The option bought is further out of the money than the option sold. Also known as non-directional strategies, they are so named because the potential to profit does not depend on whether the underlying stock price will go upwards or downwards.

Neutral strategies in options trading are employed when books on trading puts and calls options trader does not know whether the underlying stock price will rise or fall. Sell a put option on a stock you want to own, choosing a strike price that represents the price you are willing to pay for stock. Both calls must have the same underlying security and expiration month. A bull put spread is constructed by selling higher striking in-the-money put options and buying the same number of lower striking in-the-money put options on the same underlying security with the same expiration date. The option strategy where the middle two positions have different strike price is known as an Iron condor.

Diagonal or double diagonal spread. The double option position in the middle is called the body, while the two other positions are called the wings. That cash reduces your cost.