Top 5 Options Trading Strategies

Top 5 options trading strategies:

• buy call options
• buy put options
• bull call vertical spread
• bear put vertical spread
• covered call

These five option trading strategies are my favorite for two reasons:

• simple option trading strategy
• little options broker commission
• limited investing risk

Online Options Trading tips:

• focus on one option trading strategy

What is your favorite option trading strategy?

Happy trading and keep it simple,

Option Trading Strategy

Put Ratio Backspread Strategy

Put Ratio Backspread strategy is the opposite of Call Ratio Backspread strategy.
Put Ratio Backspread strategy in Online Options Trading :

• put : put options
• ratio : different in number of contract
• back : the opposite of ordinary spread
• spread : use one type of option contract
• Put Ratio Backspread : an option trading strategy in Online Options Trading to sell higher strike price put options and buy lower strike put options with a greater number.

How to tell the Options Broker :

• sell to open higher strike price put options
• buy to open lower strike price put options

Profit and loss in Put Ratio Backspread option strategy :

• profit : unlimited
• loss : limited

caution : be careful when deciding the ratio of put options contract.

Online Options Trading http://onlineoptionstrading.blogspot.com/

Call Ratio Backspread Option Strategy

Call Ratio Backspread strategy is the alternative strategy for Call Ratio Spread strategy.

Call Ratio Backspread in Online Options Trading :

• call : call options
• ratio : different in number
• back : the opposite of ordinary spread
• spread : involves one type of option contract
• call ratio backspread : a strategy in Online Options Trading to sell lower strike price call options and buy higher strike price call option in a greater number with the same expiration date.

How to tell the Options Broker :

• sell to open call options with lower strike price
• buy to open call options with higher strike price

Profit and loss in Call Ratio Backspread :

• profit : unlimited
• loss : limited

When to use Call Ratio Backspread :

• if you expect the stock price is below the lower strike price ( net credit premium )
• if you expect the stock price goes up beyond the higher strike price

Investing Tool at http://investingtool.blogspot.com/

Put Ratio Spread Strategy in Option Trading

After Call Ratio Spread option strategy, the next option strategy is Put Ratio Spread strategy.

What is Put Ratio Spread :

• put : put options
• ratio : different number of option contracts
• spread : one type of options
• put ratio spread : an option trading strategy in Online Options Trading to buy higher strike put options and sell lower strike put options with greater number

Steps to order Put Ratio Spread to Options Broker :

• buy to open put options with higher strike price
• sell to open put options with lower strike price

Profit and loss in Put Ratio Spread :

• profit : higher strike price - lower strike price + net premium
• loss : unlimited

caution : consider the options broker commission.

Investment Tool at http://investmenttool.blogspot.com/

Call Ratio Spread in Option Trading

After Short Strangle option strategy, next strategy is Call Ratio Spread strategy.

What is Call Ratio Spread :

• call : call options
• ratio : different quantity
• spread : same type of options
• call ratio spread : an option trading strategy in online options trading to buy lower strike call options and sell greater number of higher strike call options

Steps to order Call Ratio Spread :

• buy to open call options with lower strike price
• buy to open call options with higher strike price

Profit and loss in Call Ratio Spread :

• profit = higher strike price - lower strike price + net call option premium
• loss = unlimited

When to use Call Ratio Spread :

• expect the stock price is lower than the lower strike price ( net credit premium )
• expect the stock price would stay within the range between the strike prices ( net debit premium )

Online Options Trading at http://onlineoptionstrading.blogspot.com/

FAQs in Short Strangle Option Strategy

Short Strangle Option Strategy is different from Long Strangle strategy.

What is short strangle in online options trading :

• short : sell
• strangle : OTM call options and put options
• short strangle : an option trading strategy in Online Options Trading that sell OTM call options and OTM put options with the same expiration date

Steps to order short strangle in online options trading :

• sell to open call options
• sell to open put options

Pro and contra in short strangle as option trading strategy :

• pro : time decay benefits option traders
• contra : profit is limited and loss is unlimited

When to use short strangle in online options trading :

• use short strangle in stocks with high volatility that will decrease its volatility

Use Options as Invest Tool at http://investtool.blogspot.com/

Long Strangle in Option Trading Strategy

Long Strangle strategy will be our next option trading strategy after Short Straddle strategy.

What is Long Strangle in Online Options Trading :

• long : buy
• strangle : OTM call and put options
• OTM : out of the money
• long strangle : a strategy in Online Options Trading that buys OTM call options and OTM put options with the same expiration date at the same time

Steps to order long strangle in Online Options Trading :

• buy to open call options
• buy to open put options

Pro and Contra in long strangle in Online Options Trading :

• pro : profit is unlimited, loss is limited
• contra : time decay again ts option trader

When to use long strangle in Online Options Trading :

• a low volatility market that is ready to have high volatility

Options Broker at http://optionsbroker.blogspot.com/.