Core trading strategies

We recommend use arbitrage because is 100% sure that you will win money. Specially our arbitrage system of the section check arbitrages, but if you want understand the options you can start with core trading strategies.

These basic trading strategies are very useful and are essential to become an expert. Study it carefully and when you master it you will be ready to use the advanced strategies.

Core trading strategies are basics for understand the complex strategies

We must be aware that the choice of one core trading strategy or another will depend on our analysis and the forecast we have, if we expect a lateral, bullish or bearish market.

The core trading strategies for beginners are:

Long Call

Bullish | Unlimited Profit | Limited Loss

Core trading strategies

Bullish strategy for beginners that can yield big rewards. A call gives the buyer the right, but not the obligation, to buy the underlying stock at strike price A. However, you can simply buy and sell a call before it expires to profit off the price change.

The value of the option will decay as time passes, and is sensitive to changes in volatility. Your maximum loss is capped at the price you pay for the option.

Long Put

Bearish | Nearly Unlimited Profit | Limited LossCore trading strategies - long put

Bearish strategy for beginners that can yield big rewards. A put gives the buyer the right, but not the obligation, to sell the underlying stock at strike price A. However, you can simply buy and sell a put before it expires to profit off the price change.

The value of the option will decay as time passes, and is sensitive to changes in volatility. Your maximum loss is capped at the price you pay for the option.

Covered Call

Income | Limited Profit | Nearly Unlimited Loss

Core trading strategies - covered call

Income strategy for neutral to slightly-bullish situations when you are willing to sell your stock at strike price A. When you own 100 shares of the underlying stock, you can use a covered call to generate income or sell your position at a favorable price.

If the stock reaches strike price A, the call will be assigned and your stock will be sold (but at a profit!). If it stays below the strike, you will collect the full premium to make a bit of income. The downside is that you could part ways with your stock at a price much lower than the current stock price, leaving potential profit on the table.

Cash-Secured Put

Income | Limited Profit | Nearly Unlimited Loss

Core trading strategies long put cash-secured

A simple income strategy for neutral to slightly-bearish situations when you are willing to acquire stock at strike price A (making you bullish in the long term).

By selling a cash-secured put, you receive a small premium and the obligation to buy 100 shares of the underlying if the stock expires above strike A. This allows you to make consistent income while also having the chance of purchasing the stock at a lower price if reached. The downside is that the stock could continue falling, causing you to buy a price that is much higher than the current price.

Core trading strategies are important for understand the complex strategies

We will add more core trading strategies and updating the strategies with more examples and videos. Meanwhile you can investigate at this page new strategies.

The Greeks

  • Delta: measures how much an option’s price can be expected to move for every $1 change in the price of the underlying security or index.
  • Gamma: indicates the amount that an option’s option’s delta would change in response to a $1 move in the underlying security. Gamma determines how stable the option’s delta is.
  • Theta: tells you how much the price of an option should decrease each day as the option nears expiration, if all other factors remain the same.
  • Vega: measures an option’s sensitivity to implied volatility.
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