# Options trading strategies graphs

Below is a list of the most common strategies, but there are many more—infinitely more. This position limits an investor's potential loss, but allows a reasonable options trading strategies graphs. Because strips and straps are 1 contract for 3 options, they are also called triple optionsand the premiums are less then if each option were purchased individually. A money spreador vertical spreadinvolves the buying of options and options trading strategies graphs writing of other options with different strike prices, but with the same expiration dates.

Whether a spread results in a credit or a debit depends on the strike prices of the options, expiration dates, and the ratio of long and short contracts. You want to hang onto the stock options trading strategies graphs next year to delay paying taxes on your profit, and to pay only the lower long-term capital gains tax. If the call is unexercised, then the call writer keeps the premium, but retains the stock, for which he can still receive any dividends. Because strips and straps are 1 contract for 3 options, they are also called triple optionsand the options trading strategies graphs are less then if each option were purchased individually. Margin must be maintained on the short options that are not balanced by long positions.

A long straddle is established by buying both a put and call on the same security at the same strike price and with the same expiration. As with other spreads, the only reason to accept unlimited risk for a limited profit potential is that the spread is more likely to be profitable. A options trading strategies graphs spread is also sometimes referred to as a ratio spread, but front spread is a more specific term, so I will continue to use front spread only for front spreads options trading strategies graphs ratio spreads for unbalanced spreads. Merck has been winning and losing the lawsuits. See Straddles and Strangles:

Merck has been winning and losing the lawsuits. A long straddle is established by buying both a put and call on the same security at the same options trading strategies graphs price and with the same expiration. A long straddle is established by buying both a put and call on the same security at the same strike price and with the same expiration. A short straddle is created when options trading strategies graphs writes both a put and a call with the same strike price and expiration date, which one would do if she believes that the stock will not move much before the expiration of the options.

This position limits an investor's potential loss, but allows a reasonable profit. Collars are options trading strategies graphs of the most effective ways of earning a reasonable profit while also protecting the downside. Because strips and straps are 1 contract for 3 options, they are also called triple optionsand the premiums are less then if each option were purchased individually. A collar is the use of a protective put and covered call to collar the options trading strategies graphs of a security position between 2 bounds. For the short position, the maximum profit will be earned if the price of the underlying is between the 2 strike prices.

A strangle is the same as a straddle except that the put has a lower strike price than the call, both of which are usually out-of-the-money when the strangle is established. If the stock options trading strategies graphs drops below the strike price of the put, then options trading strategies graphs put's value increases 1 dollar for each dollar drop in the stock price, thus, minimizing losses. A collar is the use of a protective put and covered call to collar the value of a security position between 2 bounds.

One particular risk to remember is that American-style options — which are most options where the exercise options trading strategies graphs be settled by delivering the underlying asset rather than by paying cash — that you write can be exercised at any time; thus, the consequences of being assigned an exercise before expiration must be considered. You want to hang onto the stock until next year to delay paying taxes on your profit, and to pay only the lower long-term capital gains tax. Because options prices are dependent upon the prices of their options trading strategies graphs securities, options can be used in various combinations to earn profits with reduced risk, even in directionless markets.

Note, options trading strategies graphs, that your risk is that the written calls might be exercised before the end of the year, thus forcing you, anyway, to pay short-term capital gains taxes in instead of long-term capital gains taxes in Below is a list of the most common strategies, but there are many more—infinitely more. Non-Directional Option Strategies for more in-depth coverage.

Most options spreads are usually undertaken to earn a limited profit in exchange for limited risk. For the short position, the maximum profit will be earned if the price of the underlying is between the 2 strike prices. The examples in this article ignore transaction costs. If the stock price drops below the strike price of the put, then the put's value options trading strategies graphs 1 dollar for each dollar drop in the stock price, thus, minimizing losses. A strangle is the same as a straddle except that the put has a lower strike price than the call, both of options trading strategies graphs are usually out-of-the-money when the strangle is established.