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Options Trading 101: Why LEAPS?

On October 15, 2007, the very first baby boomer to file for social security was Kathleen Casey-Kirschling.  Behind her, another 80 million baby boomers were preparing to retire, too, over the next two decades.  More than 10,000 were about to retire by the day.

Long and Short Butterfies

The Option Butterfly Strategy is a limited risk and limited profit trade, but on a typical butterfly trade, the profit potential is much higher than the potential loss and can offer a large positive Reward-to-Risk return on capital. The Butterfly Spreads involve 3 different option strike prices, all within the same expiration date, and can be created using either calls or puts.

Butterflies are very dynamic and can be traded for a variety of different reasons with different goals in mind such as Income, Directional, Non-Directional and Hedging.

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.