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The Best Easy-to-Learn Options Trading Strategies

Growing your wealth through investing is an age old strategy and must be considered by anyone looking to build a long term nest egg.

By Lucas Downey Updated May 29, Traders often jump into trading options with little understanding of the options strategies that are available to them. There are many options strategies that both limit risk and maximize return. With a little effort, traders can learn how to take advantage of the flexibility and power that stock options can provide.

Create an asset allocation in line with that risk tolerance, more bonds and cash for the risk averse, more stocks for those more comfortable with risk. Populate the portfolio with low cost index fundsin line with your preferred asset allocation.

5 Simple Options Trading Strategies

Rebalance annually. This article will teach you about buying Put Options to temper the losses in your portfolio if stock values decline and selling Call Options if you think the stock market will trade in a narrow range.

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Options can be speculative and they can also be conservative investment strategies. Using this strategy, I made a bit of extra cash in my investment portfolio.

Option Investing Can Increase Your Overall Returns Buying an option gives you control over many shares of stock with a limited amount of cash.

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You options are a good strategy lose more than you pay for the options contract. For conservative investors, selling call options on an existing portfolio can boost the overall portfolio returns. Buying put options can limit your losses in the event of a market downturn, similar to an insurance product.

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Although investing in stock options can be a conservative or speculative strategy, this article examines only conservative options strategies. It is also a binding contract with strictly defined terms and properties.

Top 3 Options Trading Strategies for Beginners

The holder owner of a put has the right to sell an asset such earnings 2020 on the Internet a stock, at a certain price within a certain period of time at a specific price strike price.

You can pick up as many shares as you can afford at that price.

The Best Easy-to-Learn Options Trading Strategies

If the stock price goes up and you sell, you benefit. If the stock price falls and you sell, you lose.

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Assume you own Walmart and think the shares are going to decline in price over the summer, but you do not want to sell your shares. You can buy insurance or a Put to protect yourself from loss, while still holding the underlying shares.

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Owning a stock and buying a put is called a Protective Put Strategy. This is kind of like buying insurance for your car.

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If you have an accident and the insurance company reimburses you for your loss. You are protected against a greater loss.

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Protect your portfolio with a protective put strategy Covered Call Strategy-Make Money Buy a call and you have the right to buy an asset at a certain price within a specific time period. Buying calls is a speculative strategy. On the other hand, you can write sell a call on stock you already own in order to boost your income.

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This is a conservative strategy. The buyer of the call pays you for the option to buy the stock at a specific price within a limited time period.

Four Advantages of Options

This options are a good strategy is great if you are planning to sell a stock anyhow and want to boost your return a bit. This covered call strategy is frequently practiced by portfolio managers.

Have you ever thought about trading options?

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