Strategies for Stock Investors

Spreads
Time spread
Short in one expiry Long in another expiry

Example
Short 1 XYZ MAR 60 CALL @ 3.55 Long 1 XYZ APR 60 CALL @ 4.25

Spreads
Vertical spread
Long in one expiry lower strike Short in same expiry another strike

Example
Long 1 XYZ APR 60 Call @ 4.25 Short 1 XYZ APR 65 Call @ 2.25

Time spread
Short 1 XYZ MAR 60 CALL @ 3.55 Long 1 XYZ APR 60 CALL @ 4.25 When to use
You are confident that the price of XYZ will be at or near the strike price as the near-term option expires Strike price is more than spot bullish bias Strike price is less than spot bearish bias

Time spread - Profitability

Depends on whether or not the stock price is near the options strike price when the near term option expires It doesnt matter if it is above or below the strike price Closer the better

Time spread

Vertical Spread
Bull spread Bear spread

Vertical Bull/Bear Spread

Bullish spread
Long Call Strike < Short Call Strike Long Put Strike < Short Put Strike

Bearish spread
Long Call Strike > Short Call Strike Long Put Strike > Short Put Strike

Vertical bull spread when to use?

Used by an investor who may not be entirely comfortable with either a long Call or Short put position It is a bullish trade because it allows the investor to establish a position even when unsure of his bullish expectations

Vertical Bear Spread When to use?

Use by an investor who think that XYZ will fall in price but not sure of magnitude It may be entered as a conservative position when uncertain about the likelihood of a decline

Bull Spread
Long 1 April 60 Call @ 4.15 Short 1 April 65 Call @ 2.2

Vertical Spread Pay off

Maximum Profit/Loss

Bullish Strategies Long XYZ Stock

Opinion : Bullish to Very bullish

Bullish Strategies Buy a Call

Opinion: Bullish to Very Bullish

Bullish Strategies Synthetic Long Call

Opinion :Bullish to Very Bullish Married Put Limited Loss / Unlimited Profit

Bullish Strategies Covered Write

Opinion: Not bearish to bullish

Bullish Strategies Short Put

Opinion: Neutral to bullish

Bullish Strategies Covered Straddle

Opinion: Neutral to bullish

Bullish Strategies Synthetic Long Stock

Opinion: Bullish to Very Bullish

Bullish Strategies Bull Call Spread

Opinion: Bullish to Very Bullish Vertical spread

Bullish Strategies Call Time Spread

Opinion: Bullish to very Bullish OTM calls are used because you are very bullish

Bearish Strategies Short XYZ Stock

Opinion: Bearish to very Bearish

Bearish Strategies Long PUT

Opinion: Bearish to very Bearish

Bearish Strategies Long PUT

Opinion: Bearish to very Bearish

Bearish Strategies Long PUT

Opinion: Bearish to very Bearish

Bearish Strategies Short a CALL

Opinion: Bearish to not Bullish

Bearish Strategies Synthetic Short Stock

Opinion: Bearish to very Bearish

Bearish Strategies Bear Call Spread

Opinion: Bearish to very Bearish Vertical Spread

Bearish Strategies Bear Put Spread

Opinion: Bearish to very Bearish Time Spread

Bearish Strategies Ratio Put Spread

Opinion: Neutral to slightly bearish

Neutral Strategies Short Straddle

Opinion: Extremely Neutral Uncovered Call Uncovered Put Together they produce neither Opinion is XYZ will stay near narrow range of 60

Neutral Strategies Short Straddle

Opinion: Neutral You think the market will be in narrow range Not willing to accept unlimited loss Short Straddle with a conservative twist

Thank you!!!!