An investment Plan in one's life is really a game-changing plan. Therefore, for an effective financial future you will need to examine and reconsider your portfolio on a regular basis. But often it is observed that in the options game, traders only want to maximise their profits at low risks. So they only jump here without knowing of the available Options Strategies. But with little effort and research, traders can do wonders and utilise options with their maximum. Bearish strategies
Options Strategy involves the simultaneous buying and selling of one or more options with distinct variables. It intends to target on a particular risk or opportunity combined with elimination of other possible risks or dangers. It's classified as: Bullish Strategy, Bearish Strategy and Neutral Strategy.
Bullish Strategy: - Generally the options trader goes with this strategy when he expects the underlying stock price to go to a higher place. It becomes essential for him with an estimate of the stock price and its time frame in that your possible rise can happen. When the trader is bullish and is looking for a moderate rise in the price of underlying asset, he then opts for Bull Call Spread Strategy. It involves buying the decision options at a particular rate and then selling them an increased rate in the same expiration period and underlying asset.
Bearish Strategy: - This strategy is recognized as when the options trader expects the underlying stock price to fall. An estimate is required of how low the stock price would be, along using its time frame of decline. When the trader is bearish and is expecting a drop in the price of underlying asset, he then opts for Bear Put Spread Strategy. In this instance, the options trader buys the put options at a particular rate and then sells them at less rate in the same expiration period and underlying assets. These strategies provide limited gains and limited losses. Bullish strategies
Neutral strategy: - This strategy can also be called non-directional strategy. Here the options trader has no idea about the price of the underlying stock. It could either rise or fall. Moreover, the profit in this instance does not be determined by the rising price i.e. if the cost will rise, the profit will also rise, and instead it relies on the expected volatility of the underlying stock price. Types of this strategy are Strangle, Straddle, Butterfly, Collar, Risk Reversal, Iron Butterfly, Iron Condor etc.