Overview of Options Strategies

Market Outlook Strategy Payoff Graph
 Very Bullish  Call Ratio Backspread  
 Bullish  Long Call  
 Bullish  Short Put  
 Bullish  Bull Call Spread  
 Bullish/Stable Put Ratio Spread  
 Moderately Bullish  Bull Put Spread  
Slightly Bullish to Neutral Covered Call  
 Very Bearish  Put Ratio Backspread  
 Bearish  Short Call  
Bearish  Long Put  
 Bearish  Bear Put Spread  
 Bearish/Stable  Call Ratio Spread  
 Moderately Bearish  Bear Call Spread  
 Slightly Bearish to Neutral  Covered Put  
 Stable  Short Straddle  
 Stable  Long Butterfly  
 Stable  Long Condor  
 Stable Long Iron Butterfly  
 Volatile  Long Straddle  
 Volatile  Long Strangle  
 Volatile  Long Synthetic Straddle  

Stock Options Basics

If you are new to options trading, you can start off here in a systematic way. Do read the following links.

1. The fundamentals of stock options
2. General Information On Buying options : Long Call & Put Options
3. Worked Example Of Buying Call Options
4. Worked Example Of Selling Call Options
5. Introduction To Buying And Selling Put Options
6. Understanding Option Strike price(Exercise price)
7. When Can An Option Be Exercised?
8. Option premium is the option price
9. Exercise And Assignment Process
10. Moneyness Of Options – The Relationship Between Exercise Price & Price Of Underlying Security
11. Understand That Option Buyers Exercise While Option Sellers Are Assigned
12. Understand option expiration and expiration cycles
13. Begin your options trading journey
14. Find a suitable options broker and brokerage firm
15. Learn to read and understand the options chain
16. Order entry
17. Understand the Terminology of options transactions
18. Types of orders option traders can use
19. Understand the fundamentals of margin requirements

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Begin Your Options Trading Journey

Before you being your options trading journey, you are advised to do a few things. You would have to acquire as much knowledge as possible to make options trading a successful endeavour. This website contains all that you need for investing and trading success.

However, I urge you to go beyond what is spoken about in most forums and find out what your inclinations towards the subject is. Perhaps, you are an investor who wants cash flow but shuns the risk of a leveraged position. In such a case covered calls are for you. In other instances, there are others who like taking on risk and believe in long only positions that can reap huge rewards. Then the long call option strategy may be for you. In any case, there is something for every one here. From there, you can want to acquaint yourself with strategies suited to your personality. From here, we suggest that you take the next step which is to educate yourself about option strategies.
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Technical Analysis

Technical analysis is the art and science of interpreting charts to make buy or sell decisions. In technical analysis, those buy or sell decisions are timed so as to maximise profit from trading. In fact, many option traders use technical analysis to determine their entry and exit points in the market.

Technical analysis can be further classified into:

  • Indicator based
  • Price patterns

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Selling Options To Earn Option Premium

When a trader decides to sell options, he gets to keep the option premium which he sold it for. Eventually, over the life of the option, the option loses its time value.

Without any major price moves of the underlying security, the options that the trader sold is likely to expire worthless. When the option expires worthless, the trader gets to keep the entire premium which he sold it for initially. When the options expire worthless, the trader is in effect buying back the options at a cost of $0.

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