The butterfly spread, or to be more precise the long butterfly spread, is a relatively advanced neutral options trading strategy with limited loss and limited profitability. It is normally put on for a debit, which places it in the category of debit spreads. Let us have a closer look at what this spread has to [...]
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The long straddle is an options trading strategy which is perfectly suited to a volatile market where the trader is not certain whether the underlying trading asset will break out to the upside or downside. As such it will be profitable with either a large increase or decrease in the price of the underling asset [...]
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It is quite possible to profit from trading a single type of option trade, e.g. buying call options if one believes the price of the underlying asset will rise or buying put options if one believes it will drop between now and the expiration date. Options trading, however, has gained its legendary versatility exactly because [...]
Continue reading →For anyone who wishes to get involved in the world of options trading, it is vital to understand the concept of option moneyness and how it relates to the price and other important aspects of the option. Before the concept of moneyness is explained, it is important to recap what is meant by the strike [...]
Continue reading →Options have become one of the favourite trading instruments of small traders across the world during the past ten years and since the advent of the Internet, the growth of the options industry has literally exploded. Demo account Anyone who is new to options trading should first consider opening a free demo account with one [...]
Continue reading →What is options trading? For many stock traders, options trading is still shrouded in mist. They consider it to be a very dangerous form of trading which should be avoided at all costs. Nothing could be further from the truth: once a trader knows what he or she is doing, options trading could in fact [...]
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