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All stock market multi-millionaires must be able to profit under any
kind of market conditions. If you are able to profit only when stock
markets go up, then you will find it a gargantuan task to ever have any
sustainable success, much less become a stock market millionaire.
Yes! It is possible and easy to profit whether stocks are up, down or
sideways using option stock trading. If the ability to trade all kinds of
market conditions is the doorway to becoming a stock market
millionaire, then option trading would be the very key.
In this article, I will outline some common ways by which you can
profit from all kinds of markets by option trading. For more free
option trading information, you may wish to visit www.OptionTradingPedia.com.
Simple Option Strategies for Up Markets
Buy Call Option - You could buy the
same number of equivalent stocks for a fraction of the price using call
options and profit when the stock goes up. If the stock should crash,
you will lose only the small amount you put towards buying the option
instead of the whole amount that you would have put towards buying the
stock itself.
Sell Naked Put Option - Instead of buying call options, you could sell
short put options thereby pocketing the entire amount you made on
selling the put options if the stock should go up.
Bull Call Spread - A
bull call spread consists of buying call options at the money and
selling short out of the money call options of the same month. The
benefit of this strategy is that you profit when the stock goes up and
profit also when the stock stays sideways!
Simple Option Strategies for Down Markets
Buy Put Option - Instead of
shorting stocks and risking a margin call, you could simply buy a put
option. Buying a put option is exactly the same as buying call options
except that you profit when the stock goes down instead of up.
Sell
Naked Call Option - Instead of buying put options, you could sell short
call options thereby pocketing the entire amount you made on selling
the put options if the stock should go down.
Bear Put Spread - A bear put spread consists of buying put options at
the money and selling short out of the money put options of the same
month. The benefit of this strategy is that you profit when the stock
goes down and profit also when the stock stays sideways!
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Simple Option Strategies for UP or DOWN Markets
Straddle - A straddle
consist of buying a call option and a put option at the same strike
price on the same stock. This strategy allows you to profit whether the
stock moves up or down and is excellent when you are certain that a
stock will move greatly soon but isn't sure which direction that may be.
Strangle - Similar concept to a straddle but buys out of the money
call option and put option instead of at the money ones in order to
reduce the cost of the position.
Simple Option Strategies for Sideways Markets
Covered Call - If you
are holding on to a stock that is moving sideways, you could collect
"rental" out of it by selling the call option of that stock month after
month and pocket the whole amount of the sale should the stock remain
sideways.
Short Straddle - Instead of buying call options and put options as
described above in a Straddle, you would sell short them instead. In
this way, you create an option position which profits when the stock
remains sideways.
Are you amazed now at how easy it is to profit in any kind of market
conditions by option trading? These are only very few of the many more
option trading strategies that you can use to your specific portfolio
needs. To learn more about what option stock trading and stock options are
for free, please visit www.OptionTradingPedia.com.
Jason Ng is the Founder of Masters 'O' Equity Asset Management. He is a
fund manager specialising in options trading and his Star Trading
System has helped thousands. For Free Option Stock Trading Knowledge, please
visit www.OptionTradingPedia.com.
Article Source : http://www.article-matrix.com
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