It requires a lot of work to determine which is the best stock option strategy for you because you have to learn each strategy's strengths and weaknesses and understand the advantages, disadvantages, and limitations of every one. The following should help you settle on what stock option strategy is best for you:
1. Long Straddles/Strangles
This is ideal for when the stock's option volatility is low range and there is a likely chance that there will be an increase in movement. This stock option strategy is more suited for aggressive traders because of its high-risk-high-
2. Short Call/Put Spreads
This stock option strategy can be a good moneymaker if the market moves towards the correct direction you're aiming for. But it can also stay unmoving and it might even go a little against you. The risk versus reward ratio is often inverted in this case because although this produces decent trades, it can also go against you every once in a while.
3. Long Call/Put Spread
This is a good stock option strategy if the trending market is strong. It might be a little dangerous under other conditions but the risks are limited. This is excellent for trending markets and people who are new to trading can easily understand how this works. Get Internet #1 - Best Stock Options Strategies @ http://tradingcure01.webs.com and be Successful forever!
4. Long Time Spreads
This is a stock option strategy that can work for both directional trades and stable markets. These spreads are ideal for novice traders. This strategy is easy to understand, the pace is low, the risks are low, but the return is moderate. They do not require constant attention but they do need to be watched every once in a while.
5. Butterflies and Broken-Winged Butterflies
This is ideal for novice traders as there is a high risk-reward ratio, it is the kind of stock option strategy that is low maintenance, the cost of entry is low, and it is very easily to understand for people who are still new to trading. This can also act as an excellent medium for learning far more advanced strategies. Although Butterflies are easier to understand than Broken-Winged Butterflies, they cost more and they take a really long time for them to become profitable. Broken-Winged Butterflies, on the other hand, can become slightly profitable even if the stock stays unmoving or if it moves slightly in the wrong direction that you are aiming for. Most successful floor traders have preferred to use the Broken-Winged Butterflies strategy.
For the more conservative trader, this stock option strategy is an excellent choice. This can be the recommended strategy for new traders. Sometimes the collars lose if the market goes up and the other way around. All you need is a lot of patience and you might get lucky in the end.
There are a lot of factors to consider when choosing the best stock option strategy. It is also a good idea to ask someone who has been a trader for a while now to find out what strategy works best for you. Get Internet #1 - Best Stock Options Strategies @ http://tradingcure01.webs.com and be Successful forever!
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