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If there’s a stock that you think will go up and you are more than happy to buy it at a lower price, this is the strategy for you. A risk-reversal is an option position that consists of being short (selling) an out of the money put and being long (i.e. buying) an out of the money call, both with the same maturity. A risk reversal is a position which simulates profit and loss behavior of owning an underlying security; therefore it is sometimes called a synthetic long. This is an investment strategy that amounts to both buying and selling out-of-money options simultaneously. In this strategy, the investor will first make a market hunch; if that hunch is bullish he will want to go long. However, instead of going long on the stock, he will buy an out of the money call option, and simultaneously sell an out of the money put option. Presumably he will use the money from the sale of the put option to purchase the call option. Then as the stock goes up in price, the call option will be worth more, and the put option will be worth less. ...

I am doing an experiment in my training trading account with Interactive Brokers . I purchased these LEAPs at the beginning of 2020. AMD $60 calls trading at $7.20 , breakeven $67.20 TSLA $600 calls $62.85 , breakeven $662.85 BYND $120 calls $21.85 , breakeven $141.85 AAPL $330 calls $28.95 , breakeven $358.95 How have them performed? Well, apple did a split and is at $150. Tsla is over $1000. AMD is at $150. ...

Options Trading 101: The Butterfly Spread Strategy Explained Ever feel like a stock is glued to a specific price? Some stocks just seem to hover around a certain level, barely budging for weeks. If you’re looking for a way to profit from this lack of movement, the Butterfly Spread strategy might be just what you need. It’s like betting on a stock to stay put, but with a twist. Let’s break it down. ...

Options Trading 101: The Collar Strategy Explained Ever feel like your stock portfolio is a rollercoaster ride? One day you’re up, the next day you’re down, and you’re just trying to hold on for dear life. Enter the Collar strategy. It’s like putting a seatbelt on your investments—you’re still in the ride, but you’ve got some protection if things go south. Let’s break it down and see how it works. ...

Options Trading 101: The Diagonal Spread Strategy Explained Ever feel like you want to have your cake and eat it too? In the world of options trading, the Diagonal Spread is about as close as it gets. It’s a strategy that lets you profit from time decay while still keeping an eye on directional movement. Think of it as a hybrid between a Calendar Spread and a Vertical Spread—flexible, versatile, and perfect for traders who like to think outside the box. Let’s break it down. ...

Options Trading 101: The Bear Put Spread Strategy Explained Ever feel like a stock is about to take a nosedive, but you don’t want to risk your entire savings on a single trade? Enter the Bear Put Spread strategy. It’s like buying insurance for a stock’s decline, but with a budget-friendly twist. Let’s break it down and see how it works. What Is a Bear Put Spread? A Bear Put Spread is an options strategy where you buy a put option at a higher strike price and sell a put option at a lower strike price on the same stock with the same expiration date. Here’s the deal: ...

Options Trading 101: The Bull Call Spread Strategy Explained Ever feel like a stock is about to take off, but you don’t want to risk your entire savings on a single trade? Enter the Bull Call Spread strategy. It’s like buying a ticket to the stock market’s bull run, but with a budget-friendly twist. Let’s break it down and see how it works. What Is a Bull Call Spread? A Bull Call Spread is an options strategy where you buy a call option at a lower strike price and sell a call option at a higher strike price on the same stock with the same expiration date. Here’s the deal: ...

Options Trading 101: The Calendar Spread Strategy Explained Ever feel like a stock is stuck in a holding pattern, but you know it’s just biding its time before a big move? Enter the Calendar Spread strategy. It’s like planting a seed and waiting for it to grow—patience is key, but the payoff can be worth it. Let’s break it down and see how it works. What Is a Calendar Spread? A Calendar Spread is an options strategy where you sell a short-term option and buy a long-term option on the same stock with the same strike price. Here’s the deal: ...

Options Trading 101: The Cash Secured Put Strategy Explained Ever wished you could buy your favorite stock at a discount? Or maybe you’re looking for a way to earn some extra income while waiting for the perfect buying opportunity? Enter the Cash Secured Put strategy. It’s like putting a “limit order” on a stock, but with a paycheck attached. Let’s break it down and see how it works. What Is a Cash Secured Put? A Cash Secured Put is an options strategy where you sell a put option on a stock you’d like to own, while setting aside enough cash to buy the stock if needed. Here’s how it works: ...