Options Trading Strategies
- Covered call strategy or buy-write strategy: Stocks are bought, and the investor sells call options on the same stock. The number of shares you bought should be identical to the number of call options contracts you sold.
- Married Put Strategy: After buying a stock, the investor buys put options for an equivalent number of shares. The married put works like an insurance policy against short-term losses call options with a specific strike price. At the same time, you’ll sell the same number of call options at a higher strike price.
- Protective Collar Strategy: An investor buys an out-of-the-money put option, while at the same time writing an out-of-the-money call option for the same stock.
- Long Straddle Strategy: Investor buys a call option and a put option at the same time. Both options should have the same strike price and expiration date.
- Long Strangle Strategy: Investor buys an out-of-the-money call option and a put option at the same time. They expire on the same date but they have different strike prices. The put strike price should be below the call strike price.