What exactly is an option trading strategy?
An option trading strategy is a hybrid combination of futures and options, or of two different options, that results in a product with defined risk, returns, or both. Option strategies are possible due to the unique nature of options, which are volatile in nature.
Options strategies are generally classified into six categories, which are as follows:
- Bullish strategies
- Bearish strategies
- Moderately bullish strategies
- Moderately bearish strategies
- Volatile strategies
- Range bound strategies
Protective Puts, Covered Calls and Collars
These are the three most fundamental strategies that are employed on a regular basis. These three options strategies are simple to understand and execute in the … Read the rest