A good options trader is someone who can forecast with confidence the direction of the market and choose their trade based on what they expect to happen in that scenario.
There are many ways to enter into an options trade, but these four strategies are among the most popular types of trades today.
What is options trading?
According to the experts at SoFi options trading strategy is a unique kind of derivative trade that enhances a person’s standard portfolio. Options come in two parts: the right to buy or sell and the premium paid for that right. In other words, an options trader is essentially betting on some future event and purchasing the right to make money if their prediction is correct.
SoFi’s knowledge and expertise have enabled them to create a platform where investors can trade options and other interesting financial products.
4 Options Trading Strategies You Need to Know
1. The Long Call
A call option is a contract that allows the holder to purchase 100 shares of the underlying stock at a fixed price called the strike price. A long call is simply an options Personal Tradelines who purchased the right to purchase a stock well in advance and is now exercising their right. Sofi’s knowledge and expertise are good in helping their customers create in-depth portfolios that meet their unique needs and objectives.
2. The Long Call
The most popular long call strategy is the long call, which is buying the stock at a specific price that one needs to think will be reached within one year. For example, if individuals purchase 100 shares of a stock that trades at $100 per share and think it will reach $150 per share in one year, they can make $150 per share just by selling their 100 shares of the stock each month the next year.
3. Long Bestride
A long straddle is when an individual buys calls and puts on the same security, with the belief that the stock will move significantly upwards or downwards. This one is risky because the trader has very little control over what direction they think it will move, making it somewhat of a cheap gamble. According to the experts at SoFi, one way to make this more safe is to spread the risk out over several different stocks and try and predict which direction the market as a whole is moving in.
4. The Short Put
A short put is a trade where an individual sells a put on the same security, with the belief that the stock will decline. If the stock moves upwards, a person will lose their initial investment and no profit. According to the experts at SoFi On the other hand, if it falls significantly, their initial investment could turn into quite a large profit.
Although there are many different options trading strategies, these four are among the most popular. They are all forms of long calls or short puts, which is a way to leverage the intrinsic value and make money from that stock’s movement within a specific time frame. The right combination of calls and puts can be the perfect way for investors to protect their assets while enjoying significant growth.