Option Trading for Beginners by Richard Will

Author:Richard Will
Language: eng
Format: epub
Tags: day trading options, options trading, binary options, how to trade options, get rich with options, stock options, binary options trading
Publisher: Amazing Publisher
Published: 2017-02-02T00:00:00+00:00

So as you can see the parameters which make this an economical and effective strategy is that the necessary output that one needs for collars are established so they offer out the most protection possible for all your current holding (long) stock positions for as low a cost as is possible. The premium output on the protective puts you have to pay is eventually offset by your incoming premiums you'll receive for selling (writing) covered calls at prices that are equal to ones you paid out on the protective put contracts.

Using this strategy you won't be able to 100% predict the profits you'll be able to make, as this strategy has a bunch of factors that will influence things. These factors include volatility of underlying asset or stock, your investment capital, the strike price value, the amount of times you were able to repeat the strategy and the expiration.

That being said as long as you are strictly adhering all the parameters given for both incoming and the outgoing premiums you are all but guaranteed to make a profit.

Using this strategy don't expect to receive high profits but it's great for learning the ropes and getting your feet wet trading. I highly recommend starting out using this method.

One last thing to remember is commission fees. When determining your profits don't forget your brokerage firm will always get a cut. These fees can vary depending on your account type and the company you went with. Always know the rates for these fees before signing up for your trading account. You want to shop around for the best deal possible.

Synthetic Long Call Strategy

This is the second strategy I suggest starting out with initially. It's very different from the first strategy but still involves minimal risk. This method is more profitable than the previous method discussed.

Synthetic long calls are used to help complement a series of similar long puts. This strategy derives its name from the act of making a long call position work in favor with a same series of long puts.

Here's a further breakdown:

Long 100 Shares

Buy 1 (ATM) “at the money” put

Higher profit potential

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