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An option’s implied volatility (IV) gauges the market’s expectation of the underlying stock’s future price swings, but it doesn’t predict the direction of those movements.
If the stock moves significantly, one of the options could lose a lot. Example: Stock ABC is $20, and a $20 put pays $1 and a $20 call pays $1. Creating this trade yields $2 upfront, or a total of ...
The post 6 Stock Option Trading Strategies to Consider appeared first on SmartReads by SmartAsset. Options give investors ways to profit whether stocks rise, fall or hold steady. But they also ...
The most bearish of options trading strategies is the simple put buying or selling strategy utilized by most options traders. The market can make steep downward moves. Moderately bearish options traders usually set a target price for the expected decline and utilize bear spreads to reduce cost.
To an option trader engaging in volatility arbitrage, an option contract is a way to speculate in the volatility of the underlying rather than a directional bet on the underlying's price. If a trader buys options as part of a delta-neutral portfolio, he is said to be long volatility. If he sells options, he is said to be short volatility. So ...
This options trading strategy is the flipside of the long put, but here the trader sells a put — referred to as “going short” a put — and expects the stock price to be above the strike ...