Option strategies

Option strategies allow traders to limit their risk and maximize their return, while controlling more positions for less money than trading stocks. They also allow traders to profit in any type of market – upward downward, or neutral.

An option strategy involves the buy (and/or sell) of one or more option types (calls or puts) – usually simultaneously – which allows a trader to potentially profit from an underlying stock’s price movements or stagnant state.

In the following sections, we’ll describe each strategy, including the benefits and downsides, using detailed examples. 

Tip: to see any option strategy in action, please watch our Creating multi-leg option orders playlist on YouTube. For an optimized viewing experience, watch the video on YouTube in full 720p HD. To open the video in YouTube, click the YouTube button in the bottom right corner of the video window and select the change settings icon to modify the video quality. 

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