Put Option Strategies for Smarter Trading

$10.30

  • Pages: 235
  • Format: PDF
  • Published Date: 2010

Description

Put Option Strategies for Smarter Trading: How to Protect and Build Capital in Turbulent Markets

Put Option Strategies for Smarter Trading explains all the put-based strategies in detail and shows how even a troubled market presents great opportunities to keep you in control.

The worst aspect of volatile markets is a sense of not having control over events, and puts can be used to offset this apprehension. You
have probably heard that astute traders can earn profits in all types of markets. Puts are among the best devices to accomplish that goal.

Introduction:

A put is an option designed to increase in value when the underlying security’s value falls. It is the opposite of a call, which is better known as an instrument that tracks a stock’s value and rises when the stock’s price rises. Traders often overlook put options because so many are naturally optimistic by nature.

It is a common pitfall to believe that a stock’s value is always going to rise, and many investors treat their purchase price as a starting point from which values can only increase as time goes by. But anyone who was invested in the markets in 2008 and 2009 knows that this belief is flawed and also that it has expensive consequences.

Stocks do fall in value. And when they do, it often defies logic. In 2008, rapid declines in stocks once thought to be invincible made the point that markets overreact. By the end of 2008, many stocks were available at bargain prices, but panic and fear were so widespread that few investors were brave enough to put capital into the equity markets.

This is the perfect market for option trading—and for a number of reasons.

Contents:

  • THE FLEXIBLE NATURE OF OPTIONS: RISKS FOR ALL LEVELS
  • PUTS, THE OTHER OPTIONS: THE OVERLOOKED RISK HEDGE
  • PROFIT-TAKING WITHOUT SELLING STOCK: AN ELEGANT SOLUTION
  • SWING TRADING WITH PUTS: LONG AND SHORT OR COMBINED WITH CALLS
  • PUT STRATEGIES FOR SPREADS: HEDGING FOR PROFIT
  • PUT STRATEGIES FOR STRADDLES: PROFITS IN EITHER DIRECTION
  • PUTS IN THE RATIO SPREAD: ALTERING THE BALANCE
  • PUTS AS PART OF SYNTHETIC STRATEGIES: PLAYING STOCKS WITHOUT THE RISK
  • PUTS IN CONTRARY PRICE RUN-UPS: SAFE COUNTERPLAYS DURING BEAR MARKETS
  • UNCOVERED PUTS TO CREATE CASH FLOW: RISING MARKETS AND REVERSAL PATTERNS