Your SlideShare is downloading. ×
0
Profitable Options Strategies
Profitable Options Strategies
Profitable Options Strategies
Profitable Options Strategies
Profitable Options Strategies
Profitable Options Strategies
Profitable Options Strategies
Profitable Options Strategies
Profitable Options Strategies
Profitable Options Strategies
Profitable Options Strategies
Profitable Options Strategies
Profitable Options Strategies
Profitable Options Strategies
Profitable Options Strategies
Profitable Options Strategies
Profitable Options Strategies
Profitable Options Strategies
Profitable Options Strategies
Profitable Options Strategies
Profitable Options Strategies
Profitable Options Strategies
Profitable Options Strategies
Profitable Options Strategies
Profitable Options Strategies
Profitable Options Strategies
Profitable Options Strategies
Profitable Options Strategies
Profitable Options Strategies
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Profitable Options Strategies

542

Published on

www.options-trading-education.com …

www.options-trading-education.com


Profitable Options Strategies

Traders can use a number of profitable options strategies depending upon their risk tolerance and degree of expertise. Profitable options strategies also depend upon why one is trading options in the first place. Companies that buy and sell products across the world buy options to hedge risk. Currency speculators use a range of profitable options strategies aimed at enhancing profits while limiting loss. First of all let us look at profitable options strategies from the view point of risk limitation.

Options in Foreign Currency Trading

ABC Company in the USA decides to buy machine parts from a company in Germany. They will need to pay in Euros upon delivery six months hence. They are concerned that the price of the Euro will go up versus the dollar before payment is due. This would obviously make their purchase more expensive. They could simply pay right away but would rather have the use of their money for the next six months. ABC Company will choose to buy calls on the Euro for the amount of the contract. If the Euro goes up in price they will execute the contract so that they can buy Euros at the lower contract price and not the subsequently higher spot price. If the Euro does not go up in price they will no need to execute the contract and if the Euro actually falls in price they will save money by waiting. This is one of the profitable options strategies can foreign currency traders can use. It is a sound strategy for hedging risk with options.

Market Speculation with Options

Often times profitable options strategies have to do with speculating in a volatile stock market. Let us say that you are interested in the stock of ABC Company. The stock price has been bouncing up and down in a very volatile market. You believe that the stock is either going to go up substantially or fall precipitously depending upon the success or failure of a buyout attempt by a competitor. In order to profit in either case you use what is called a long straddle options strategy. In this case you buy both a put and a call on ABC Company, both with the same expiration date and for the same strike price. Your cost of this strategy is the price of the two options contracts. You will profit if the stock price rises or falls as you will execute the appropriate contract. If the stock price simply stays put your loss will be limited to the price of the contracts.

Adding a Little Profit to Your Investment Portfolio

Investors who own a given stock can often profit from selling calls on the stock. If you correctly believe that ABC Company is at the top of its current trading range you can sell calls on the stock. You will receive the price of the options contract, like getting an extra dividend. Providing that your judgment is sound you will keep the stock because the price will not rise.

0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
542
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
32
Comments
0
Likes
1
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  1. www.options-trading-education.com
  2. Traders can use a number of profitable options strategiesdepending upon their risk tolerance and degree of expertise. www.options-trading-education.com
  3. Profitable options strategies alsodepend upon why one is trading options in the first place. www.options-trading-education.com
  4. Companies that buy and sellproducts across the world buy options to hedge risk. www.options-trading-education.com
  5. Currency speculators use a range of profitable options strategies aimed at enhancing profits while limiting loss. www.options-trading-education.com
  6. First of all let us look at profitableoptions strategies from the view point of risk limitation. www.options-trading-education.com
  7. Options in Foreign Currency Trading www.options-trading-education.com
  8. ABC Company in the USA decides to buy machine parts from a company in Germany. They willneed to pay in Euros upon delivery six months hence. www.options-trading-education.com
  9. They are concerned that the price of the Euro will go up versus thedollar before payment is due. This would obviously make their purchase more expensive. www.options-trading-education.com
  10. They could simply pay right awaybut would rather have the use of their money for the next six months. www.options-trading-education.com
  11. ABC Company will choose to buycalls on the Euro for the amount of the contract.If the Euro goes up in price they will execute the contract so that theycan buy Euros at the lower contract price and not the subsequently higher spot price. www.options-trading-education.com
  12. If the Euro does not go up in price they will no need to execute the contract and if the Euro actuallyfalls in price they will save money by waiting. www.options-trading-education.com
  13. This is one of the profitable options strategies can foreign currency traders can use. It is a sound strategy for hedging risk with options. www.options-trading-education.com
  14. Market Speculation with Options www.options-trading-education.com
  15. Often times profitable options strategies have to do withspeculating in a volatile stock market. www.options-trading-education.com
  16. Let us say that you are interested in the stock of ABC Company. www.options-trading-education.com
  17. The stock price has been bouncing up and down in a very volatile market. www.options-trading-education.com
  18. You believe that the stock is eithergoing to go up substantially or fallprecipitously depending upon the success or failure of a buyout attempt by a competitor. www.options-trading-education.com
  19. In order to profit in either case you use what is called a long straddle options strategy. In this case you buy both a put and a call on ABC Company, both with the same expiration date and for the same strike price. www.options-trading-education.com
  20. Your cost of this strategy is the price of the two options contracts.You will profit if the stock price rises or falls as you will execute the appropriate contract. www.options-trading-education.com
  21. If the stock price simply stays putyour loss will be limited to the price of the contracts. www.options-trading-education.com
  22. Adding a Little Profit to Your Investment Portfolio www.options-trading-education.com
  23. Investors who own a given stockcan often profit from selling calls on the stock. www.options-trading-education.com
  24. If you correctly believe that ABCCompany is at the top of its currenttrading range you can sell calls on the stock. www.options-trading-education.com
  25. You will receive the price of the options contract, like getting an extra dividend. Providing that yourjudgment is sound you will keep the stock because the price will not rise. www.options-trading-education.com
  26. The worst that could happen is that you would miss out on anunexpected jump in the stock price as the buyer of the option would execute the contract and buy the stock at the contract price. www.options-trading-education.com
  27. With good technical and fundamental analysis of stock one of the more profitable optionsstrategies for an investor is to profit from selling calls on a stock that your own. www.options-trading-education.com
  28. With good technical and fundamental analysis of stock one of the more profitable optionsstrategies for an investor is to profit from selling calls on a stock that your own. www.options-trading-education.com
  29. www.Options-Trading-Education.com

×