Long and Short Condors

Most people invest with the expectation that a stock will go up in price. Others look for stock value to decrease. But is there a way to invest in stocks when the market is flat? There is a way to trade sideways markets with iron Condors.

The Iron Condor is a volatility strategy, where profits are based on an increase or decrease in the implied volatility of a stocks's option.

Long and Short Strangles

The option strangle is a volatility strategy, like the straddle, that can make a profit based on an increase or decrease in the implied volatility of a stock's option.

The difference is that the strikes are not set ATM but are set OTM.

Long and Short Straddles

Option straddles are a volatility strategy that can make a profit based on an increase or decrease in the implied volatility of a stock's option. It can be structured to profit from an explosive move up or down in the implied volatility. It can also be structured to take advantage of what is referred to as a volatility collapse.

Profit is made when there is a sudden fall in the implied volatility of a stock's option without a directional move up or down in the stock's price.

Timing Spreads

Options uniquely enable a trader to enhance trading returns by way of combining Buy/Sell legs in order to generate income on a regular basis.

Timing Spreads are characterized typically as a short-term option strategy where option premium is sold to take advantage of the time decay of an option. A trader can generate significant percentage returns with this option strategy even if the underlying stock hasn't moved at all. 

Bull Spreads and Bear Spreads

Bull Spreads and Bear Spreads require a directional trading outlook. On an Option Bull Spread you will make a profit only if the stock price rises. On an Option Bear Spread you will make a profit only if the stock falls.

The returns on this strategy can be spectacular if you get the direction and timing right. The bought leg gives you leverage and the sold leg reduces cost and increases your leverage further but at the expense of capping the upside on profits.

Options Strategy: The Collar

An investor writes a call option and buys a put option with the same expiration as a means to hedge a long position in the underlying stock. This strategy combines two other hedging strategies: protective puts and covered call writing.

Usually, the investor will select a call strike above and a long put strike below the starting stock price. There is latitude, but the strike choices will affect the cost of the hedge as well as the protection it provides. These strikes are referred to as the 'floor' and the 'ceiling' of the position, and the stock is 'collared' between the two strikes.