Ultimate Options Strategy Guide
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![Page 1: Ultimate Options Strategy Guide](https://reader035.fdocuments.us/reader035/viewer/2022081800/55cf92cb550346f57b999138/html5/thumbnails/1.jpg)
The
”ULTIMATE” Options Strategy Guide
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About Us. . .Option Alpha has been an industry leader in options trading education for 7 years.!
With more than 60,000+ subscribers, followers, fans, and and traders in our community we are on a mission to helping every single person we meet.!
So, whether you’re looking to use options for hedging and protection or speculation and income, you’ll need to know more about how to use them correctly (meaning that you should actually make a profit).!
That’s where we come into play!
![Page 3: Ultimate Options Strategy Guide](https://reader035.fdocuments.us/reader035/viewer/2022081800/55cf92cb550346f57b999138/html5/thumbnails/3.jpg)
Using This Guide
Each strategy has an accompanying graph showing profit and loss at expiration. The vertical axis shows the profit/loss scale.!!When the strategy line is below the horizontal axis, it assumes you paid for the position or had a loss. When it is above the horizontal axis, it assumes you received a credit for the position or a profit.!!The dotted line indicates the strike price. The intersection of the strategy line and the horizontal axis is the break-even point (BEP) not including transaction costs, commissions, or margin(borrowing) costs.!!The risks/rewards described are generalizations and may be lesser or greater than indicated.
![Page 4: Ultimate Options Strategy Guide](https://reader035.fdocuments.us/reader035/viewer/2022081800/55cf92cb550346f57b999138/html5/thumbnails/4.jpg)
Bullish!Options!
Strategies
![Page 5: Ultimate Options Strategy Guide](https://reader035.fdocuments.us/reader035/viewer/2022081800/55cf92cb550346f57b999138/html5/thumbnails/5.jpg)
Put Credit Spread
Example: Sell 1 put; buy 1 put at lower strike!
Risk: Limited!
Reward: Limited!
Increase in Volatility: Helps or hurts depending on strikes chosen!
Time Erosion: Helps or hurts depending on strikes chosen!
BEP: Short put strike minus net credit
![Page 6: Ultimate Options Strategy Guide](https://reader035.fdocuments.us/reader035/viewer/2022081800/55cf92cb550346f57b999138/html5/thumbnails/6.jpg)
Naked Short Put
Example: Sell 1 put!
Risk: Unlimited!
Reward: Limited!
Increase in Volatility: Hurts position!
Time Erosion: Helps position!
BEP: Strike price minus credit received
![Page 7: Ultimate Options Strategy Guide](https://reader035.fdocuments.us/reader035/viewer/2022081800/55cf92cb550346f57b999138/html5/thumbnails/7.jpg)
Call Butterfly
Example: Buy 1 call; sell 2 calls at next higher strike; buy 1 call at next higher strike (can skip strike for BWB)!
Risk: Limited!
Reward: Limited!
Increase in Volatility: Typically hurts position!
Time Erosion: Typically helps position!
BEP: Two BEPs!
1. Lower long call strike plus net debit paid!
2. Higher long call strike minus net debit paid
![Page 8: Ultimate Options Strategy Guide](https://reader035.fdocuments.us/reader035/viewer/2022081800/55cf92cb550346f57b999138/html5/thumbnails/8.jpg)
Call Debit Spread
Example: Buy 1 call; sell 1 call at higher strike!
Risk: Limited!
Reward: Limited!
Increase in Volatility: Helps or hurts depending on strikes chosen!
Time Erosion: Helps or hurts depending on strikes chosen!
BEP: Long call strike plus net premium paid
![Page 9: Ultimate Options Strategy Guide](https://reader035.fdocuments.us/reader035/viewer/2022081800/55cf92cb550346f57b999138/html5/thumbnails/9.jpg)
Call Calendar
Example: Sell 1 near-term call; buy 1 long-term call same strike!
Risk: Limited!
Reward: Limited!
Increase in Volatility: Helps position!
Time Erosion: Typically helps position!
BEP: Varies depending on strikes
![Page 10: Ultimate Options Strategy Guide](https://reader035.fdocuments.us/reader035/viewer/2022081800/55cf92cb550346f57b999138/html5/thumbnails/10.jpg)
Call Back-Spread
Example: Sell 1 call; buy 2 calls at higher strike!
Risk: Limited!
Reward: Unlimited!
Increase in Volatility: Typically helps position!
Time Erosion: Typically hurts position!
BEP: Two BEPs!
1. Short call strike plus net credit received!
2. Long call strike plus [(the difference between the long call strike and short call strike) minus credit received]
![Page 11: Ultimate Options Strategy Guide](https://reader035.fdocuments.us/reader035/viewer/2022081800/55cf92cb550346f57b999138/html5/thumbnails/11.jpg)
Neutral!Options!
Strategies
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Short Strangle
Example: Sell 1 call; sell 1 put at strikes equal from current price!
Risk: Unlimited!
Reward: Limited!
Increase in Volatility: Hurts position!
Time Erosion: Helps position!
BEP: Two BEPs!
1. Call strike plus net credit received!
2. Put strike minus net credit received
![Page 13: Ultimate Options Strategy Guide](https://reader035.fdocuments.us/reader035/viewer/2022081800/55cf92cb550346f57b999138/html5/thumbnails/13.jpg)
Long Strangle
Example: Buy 1 call; buy 1 put at strikes equal from current price!
Risk: Limited!
Reward: Unlimited!
Increase in Volatility: Helps position!
Time Erosion: Hurts position!
BEP: Two BEPs!
1. Call strike plus net debit paid!
2. Put strike minus net debit paid
![Page 14: Ultimate Options Strategy Guide](https://reader035.fdocuments.us/reader035/viewer/2022081800/55cf92cb550346f57b999138/html5/thumbnails/14.jpg)
Iron Condor
Example: Sell 1 call; buy 1 call at higher strike; sell 1 put; buy 1 put at lower strike!
Risk: Limited!
Reward: Limited!
Increase in Volatility: Helps or hurts depending on strikes chosen!
Time Erosion: Helps or hurts depending on strikes chosen!
BEP: Two BEPs!
1. Short call strike minus net credit received!
2. Short put strike plus net credit received
![Page 15: Ultimate Options Strategy Guide](https://reader035.fdocuments.us/reader035/viewer/2022081800/55cf92cb550346f57b999138/html5/thumbnails/15.jpg)
Short Straddle
Example: Sell 1 call; sell 1 put at same strike!
Risk: Unlimited!
Reward: Limited!
Increase in Volatility: Hurts position!
Time Erosion: Helps position!
BEP: Two BEPs!
1. Call strike plus net credit received!
2. Put strike minus net credit received
![Page 16: Ultimate Options Strategy Guide](https://reader035.fdocuments.us/reader035/viewer/2022081800/55cf92cb550346f57b999138/html5/thumbnails/16.jpg)
Long Straddle
Example: Buy 1 call; buy 1 put at same strike price!
Risk: Limited!
Reward: Unlimited!
Increase in Volatility: Helps position!
Time Erosion: Hurts position!
BEP: Two BEPs!
1. Call strike plus net debit paid!
2. Put strike minus net debit paid
![Page 17: Ultimate Options Strategy Guide](https://reader035.fdocuments.us/reader035/viewer/2022081800/55cf92cb550346f57b999138/html5/thumbnails/17.jpg)
Bearish!Options!
Strategies
![Page 18: Ultimate Options Strategy Guide](https://reader035.fdocuments.us/reader035/viewer/2022081800/55cf92cb550346f57b999138/html5/thumbnails/18.jpg)
Call Credit Spread
Example: Sell 1 call; buy 1 call at higher strike!
Risk: Limited!
Reward: Limited!
Increase in Volatility: Helps or hurts depending on strikes chosen!
Time Erosion: Helps or hurts depending on strikes chosen!
BEP: Short call strike plus net credit
![Page 19: Ultimate Options Strategy Guide](https://reader035.fdocuments.us/reader035/viewer/2022081800/55cf92cb550346f57b999138/html5/thumbnails/19.jpg)
Naked Short Call
Example: Sell 1 call!
Risk: Unlimited!
Reward: Limited!
Increase in Volatility: Hurts position!
Time Erosion: Helps position!
BEP: Strike price plus credit received
![Page 20: Ultimate Options Strategy Guide](https://reader035.fdocuments.us/reader035/viewer/2022081800/55cf92cb550346f57b999138/html5/thumbnails/20.jpg)
Put Butterfly
Example: Buy 1 put; sell 2 puts at next lower strike; buy 1 put at next lower strike (can skip strike for BWB)!
Risk: Limited!
Reward: Limited!
Increase in Volatility: Typically hurts position!
Time Erosion: Typically helps position!
BEP: Two BEPs!
1. Higher long put strike minus net debit paid!
2. Lower long put strike plus net debit paid
![Page 21: Ultimate Options Strategy Guide](https://reader035.fdocuments.us/reader035/viewer/2022081800/55cf92cb550346f57b999138/html5/thumbnails/21.jpg)
Put Debit Spread
Example: Buy 1 put; sell 1 put at lower strike!
Risk: Limited!
Reward: Limited!
Increase in Volatility: Helps or hurts depending on strikes chosen!
Time Erosion: Helps or hurts depending on strikes chosen!
BEP: Long put strike minus net premium paid
![Page 22: Ultimate Options Strategy Guide](https://reader035.fdocuments.us/reader035/viewer/2022081800/55cf92cb550346f57b999138/html5/thumbnails/22.jpg)
Put Calendar
Example: Sell 1 near-term put; buy 1 long-term put same strike!
Risk: Limited!
Reward: Limited!
Increase in Volatility: Helps position!
Time Erosion: Typically helps position!
BEP: Varies depending on strikes
![Page 23: Ultimate Options Strategy Guide](https://reader035.fdocuments.us/reader035/viewer/2022081800/55cf92cb550346f57b999138/html5/thumbnails/23.jpg)
Put Back-Spread
Example: Sell 1 put; buy 2 puts at lower strike!
Risk: Limited!
Reward: Limited, but substantial!
Increase in Volatility: Typically helps position!
Time Erosion: Typically hurts position!
BEP: Two BEPs!
1. Short put strike minus premium received!
2. Long put strike minus [(difference between long put strike and short put strike) minus credit received]