Limited risk option trading
Iron Condor Spread Type: Medium Fund Commitment Per Position: Iron Albatross Spread Type: Double Butterfly Spread Type: Put on 2 Butterfly Spreads on the same stock targetting two different strike prices.
Low Fund Commitment Per Position: Lower Fund Commitment Per Position: Calendar Put Spread Type: Put Time Spread Type: Horizontal Call Time Spread Type: Diagonal Call Time Spread Type: We can sell that option at anytime to lock in a profit or cut our losses. This right is valid for a specified period of time.
As an option buyer we can select a time frame that suits our objective. You can use put options as a means of protecting the sale price of stock you own or you can use them as an alternative to shorting.
By using a put option, we can profit with a limited and quantifiable risk exposure if the share value of the ETF drops. Similar to buying a call option, we would buy 1Put for every share shares we would like to control.
We are essentially paying for the right to sell those shares at a specified price known as the strike regardless of how low the stock trades. The put option will increase in value as the stock drops. This contract is valid for a specific period of time. Options are a powerful tool for speculating on stock opportunities with a limited and identifiable risk exposure. Use Options for Leverage and Limited Risk Buying calls and puts to trade a directional view is one of the simplest ways to get started trading options.