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5 Options Strategies That You Should Know?

Traders often start trading Options Trading Singapore: Call and Put Options + Strategies without knowing much about the options strategies they can use. However, there are many ways to use options that both reduce risk and make the most money. In addition, traders can learn how to use the flexibility and power that stock options can give them with a little work.

  1. Iron Butterfly

In the iron butterfly strategy in Options Trading Singapore: Call and Put Options + Strategies, an investor sells a put option that is at the money and buys a put option that is out of the money. At the same time, they will sell an option “at the money” option and buy an option “out of the money.” All options have the same end date based on the same asset. This strategy is like a butterfly spread but also uses calls and puts (as opposed to one or the other).

This strategy combines selling an “at-the-money” straddle and buying “wings” to protect yourself. You can also think of the structure as made up of two spreads. Most of the time, the width of both spreads is the same. The long call out of the money protects against an unlimited drop. The long put that is out of the money protects against losses (from the short put strike to zero). Depending on the strike prices of the options used, you can only make or lose a certain amount. Investors like this strategy because it gives them income and a better chance of making a small gain with a stock that isn’t very volatile.

  1. Iron Condor

In the iron condor strategy, the trader holds both a bull put spread, and a bear call spread simultaneously. A bull put spread is when you sell one out-of-the-money (OTM) put and buy one OTM put with a lower strike. A bear call spread is when you sell and buy one OTM call with a higher strike.

All options have the same end date based on the same asset. Most of the time, the spread width on the put and call sides is the same. This trading strategy is meant to take advantage of a stock that isn’t very volatile and earns a net premium on the structure. Many traders use this strategy because they think it gives them a good chance of making a small amount of premium.

  1. Butterfly Spread Long Call

In the past, to use a strategy in Options Trading Singapore: Call and Put Options + Strategies, you had to combine two different positions or contracts. For example, when using call options for a long butterfly spread, an investor will use both a bull spread strategy and a bear spread strategy. In addition, they will use three different strike prices. All options have the same expiration date and underlying asset.

  1. Long Strangle

In a long strangle options strategy, the investor buys a call option and a put option with different strike prices. However, both options are on the same underlying asset and have the same expiration date. Investors who use this strategy think that the underlying asset price will change a lot, but they don’t know how the price will change.

  1. Long Straddle

When an investor buys a call option and a put option on the same underlying asset in Options Trading Singapore: Call and Put Options + Strategies at the same strike price and expiration date, this is called a “long straddle.” This is a strategy that investors often use when they think the underlying asset price will move a lot outside of a certain range, but they don’t know which way it will move.

For More Information Visit: https://blog.moneysmart.sg/invest/options-trading-singapore-call-options-put-options-futu-sg-moomoo/

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