Thursday, June 15th, 2017

Index Option trading strategies


Here are some basic options trading strategies for bear markets.

1. BUY PUTS : On indexes or stocks. Usually you buy a deep in the money put that acts like a stock going down , it costs more but has a delta of 75 to 80. So if your stock goes down you move with the markets 75% and as it keeps going down the puts gather premiums quickly and almost double up.

2. SELL NAKED CALLS– That is not for the faint hearted. I sell deep in the money calls to get the maximum bang for the buck. What happens is when your stock goes down they will be reduced in size. I usually short calls with the delta of 70- to 80 on major stocks with lots of short interests. You may not be able to sell naked calls on indexes unless you are approved.

3. SELL STOCK SHORT– Well that was easy, unless you are living in cave, you must have seen where the shorties are. They are all over the market. Its these shorts that drive these markets to their demise. Shorting stock is easy, you go to to your broker and instead of buying you click on the Sell short button and click. It may take a few minutes before your broker makes sure shares are available and you will see your order in the basket as filled. Always use limit orders. You need to place a stop loss point on shorts. I usually place them above resistance and market movements using 1 min or 5 min charts. A good rule of thumb is $2 dollars above my entry. It all depends on the volatility etc.

4. SELL A CALL AND BUY A PUT: Now that’s a classy position. Its a synthetic position and acts and behaves like a short stock. This is done where you do not have shares available to short like some financials stocks these days. Lets say GOOG is a stock you cannot buy or short because of the size. So here is what I would do. I will sell GOOG at the money call and buy at the money put same strike price. Now I only put up margin for the call, which is lot less, than selling the stock short.

I myself is not a big fan of shorting stocks , they require great amount of precision and footwork. The markets go down lot faster than they go up, and you need to take profits quickly or move your stops down the ladder. You have to be quick on the draw.

Options trading strategies are not that complex you can read more here. In this bear market these option trading strategies should work well for you. Money is made both ways up or down. Knowing basic option trading strategies and mastering these strategies over a period of time should be your goal.

What do you think? Would you rather be shorting stocks or buying puts? Or would you not do anything ?

I Make $20K+ a Month
Using a Stock Trading Bot
Proven and 100% Guaranteed






Comments

2 Responses to “Index Option trading strategies”
  1. Ухты, посмотрите, полевная штука.

Trackbacks

Check out what others are saying about this post...
  1. […] [Technorati] Tag results for option trading wrote an interesting post today onHere’s a quick excerpt Here are some basic options trading strategies for bear markets. 1. BUY PUTS : On indexes or stocks. Usually you buy a deep in the money put that acts like a stock going down , it costs more but has a delta of 75 to 80. So if your stock goes down you move with the markets 75% and as it keeps going down the puts gather premiums quickly and almost double up. 2. SELL NAKED CALLS- That is not for the faint hearted. I sell deep in the money calls to get the maximum bang for the buck. What happe […]



Speak Your Mind

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!

*