• buy call options
• buy put options
• bull call vertical spread
• bear put vertical spread
• covered call

These five option trading strategies are my favorite for two reasons:

• simple option trading strategy
• little options broker commission
• limited investing risk

Online Options Trading tips:

• focus on one option trading strategy

What is your favorite option trading strategy?

Happy trading and keep it simple,

Option Trading Strategy

• put : put options
• ratio : different in number of contract
• back : the opposite of ordinary spread
• spread : use one type of option contract
• Put Ratio Backspread : an option trading strategy in Online Options Trading to sell higher strike price put options and buy lower strike put options with a greater number.

How to tell the Options Broker :

• sell to open higher strike price put options
• buy to open lower strike price put options

Profit and loss in Put Ratio Backspread option strategy :

• profit : unlimited
• loss : limited

caution : be careful when deciding the ratio of put options contract.

Online Options Trading http://onlineoptionstrading.blogspot.com/

• call : call options
• ratio : different in number
• back : the opposite of ordinary spread
• spread : involves one type of option contract
• call ratio backspread : a strategy in Online Options Trading to sell lower strike price call options and buy higher strike price call option in a greater number with the same expiration date.

How to tell the Options Broker :

• sell to open call options with lower strike price
• buy to open call options with higher strike price

Profit and loss in Call Ratio Backspread :

• profit : unlimited
• loss : limited

When to use Call Ratio Backspread :

• if you expect the stock price is below the lower strike price ( net credit premium )
• if you expect the stock price goes up beyond the higher strike price

Investing Tool at http://investingtool.blogspot.com/

• put : put options
• ratio : different number of option contracts
• spread : one type of options
• put ratio spread : an option trading strategy in Online Options Trading to buy higher strike put options and sell lower strike put options with greater number

Steps to order Put Ratio Spread to Options Broker :

• buy to open put options with higher strike price
• sell to open put options with lower strike price

Profit and loss in Put Ratio Spread :

• profit : higher strike price - lower strike price + net premium
• loss : unlimited

caution : consider the options broker commission.

Investment Tool at http://investmenttool.blogspot.com/

• call : call options
• ratio : different quantity
• spread : same type of options
• call ratio spread : an option trading strategy in online options trading to buy lower strike call options and sell greater number of higher strike call options

Steps to order Call Ratio Spread :

• buy to open call options with lower strike price
• buy to open call options with higher strike price

Profit and loss in Call Ratio Spread :

• profit = higher strike price - lower strike price + net call option premium
• loss = unlimited

When to use Call Ratio Spread :

• expect the stock price is lower than the lower strike price ( net credit premium )
• expect the stock price would stay within the range between the strike prices ( net debit premium )

Online Options Trading at http://onlineoptionstrading.blogspot.com/

• short : sell
• strangle : OTM call options and put options
• short strangle : an option trading strategy in Online Options Trading that sell OTM call options and OTM put options with the same expiration date

Steps to order short strangle in online options trading :

• sell to open call options
• sell to open put options

Pro and contra in short strangle as option trading strategy :

• pro : time decay benefits option traders
• contra : profit is limited and loss is unlimited

When to use short strangle in online options trading :

• use short strangle in stocks with high volatility that will decrease its volatility

Use Options as Invest Tool at http://investtool.blogspot.com/

• long : buy
• strangle : OTM call and put options
• OTM : out of the money
• long strangle : a strategy in Online Options Trading that buys OTM call options and OTM put options with the same expiration date at the same time

Steps to order long strangle in Online Options Trading :

• buy to open call options
• buy to open put options

Pro and Contra in long strangle in Online Options Trading :

• pro : profit is unlimited, loss is limited
• contra : time decay again ts option trader

When to use long strangle in Online Options Trading :

• a low volatility market that is ready to have high volatility

Options Broker at http://optionsbroker.blogspot.com/

• short : sell
• straddle : ATM call and put options
• short straddle : an option trading strategy in Online Options Trading that sells ATM call options and sells ATM put options at the same time with the same strike price and expiration date

Steps to order short straddle in Online Options Trading ?

• sell to open call options
• sell to open put options

Pro and Contra in short straddle ?

• pro : get the premiums in advance, time decay benefits us
• contra : loss is unlimited, profit is limited

When to use short straddle in Online Options Trading ?

• a high volatility market that you expect the volatility would decrease, so you sell at high and buy at low volatility

Futures Options Brokers at http://futuresoptionsbrokers.blogspot.com/

• long : buy
• straddle : both ATM options
• ATM : at the money
• definition : long straddle is an Online Options Trading strategy that buy ATM call options and ATM put options with the same strike price and expiration date

Steps to order long straddle :

• buy to open atm call options
• buy to open atm put options

Pro and Contra in long straddle :

• pro : profit is unlimited, loss is limited, win either market goes up or down
• contra : purchase price is high and time decay against option traders

Perfect time for long Straddle in Online Options Trading :

• a low volatility market that you expect to have a sharp increase in volatility

Investor Tool http://investortool.blogspot.com/

• bear : down market
• put : put options
• vertical spread : higher and lower strike price
• conclusion : Bear Put Vertical Spread is a strategy in Online Options Trading that buy put options with a higher strike price and sell put options with a lower strike price

Steps to order bear put vertical spread ?

1. buy to open put options at higher strike price
2. sell to open put options at lower strike price

What is the positive and negative of bear put vertical spread ?

• positive : loss is limited
• negative : profit is also limited and cheaper than buy put options

When to do bear put vertical spread ?

• when you think the market would be a moderately bearish market and the stock price would go down

How to calculate the maximum profit , loss and BEP ?

• maximum profit = ( higher strike price - lower strike price ) - net debit premium
• maximum loss = net debit premium = higher strike price premium - lower strike premium
• BEP = higher strike price - net debit premium

Online Options Trading = http://onlineoptionstrading.blogspot.com/

• bear : down market
• call : call options
• vertical spread : higher and lower strike price
• Bear Call Vertical Spread is a strategy in online options trading that buys call options at higher strike price and sells call options at lower strike price

Characteristics of Bear Call Vertical Spread Strategy :

• order : buy to open call options at higher strike price and sell to open call options at lower strike price
• positive : loss is limited, we can keep the premiums
• negative : profit is limited
• market outlook : look for a moderately bearish market, expect the stock price below the lower strike price ( down market )
• profits : net credit call option premium
• loss : ( higher strike price - lower strike price ) - net credit call options premium
• bep : lower strike price + net credit call options premium
• caution : please consider the ratio of profits and losses and the chance of winning

http://futuresoptionsbrokers.blogspot.com/

• Bull Put Vertical Spread is a strategy in Online Options Trading that buy put options at a lower strike price and at the same time sell put options at higher strike price
• order : buy to open put options at a lower strike price and sell to open put options at higher strike price
• positive : loss is limited, we can collect the premium first
• negative : profit is limited, max profit is smaller than max loss
• market outlook : moderately bullish market, expect the stock price would close above the higher strike price
• profits = premium of higher strike price put options - premium of lower strike price put options
• loss = ( higher strike price - lower strike price ) - net credit premium
• bep = higher strike price - net credit premium received
• caution : please watch the probability of winning, because the return is lower than the risk

Please remember there is no bullet proof strategy, we must learn all option strategy in Online Options Trading.

• Bull Call Vertical Spread is a strategy in Online Options Trading that buy call options at a lower strike price and sell call options at a higher strike price
• order : buy to open call options at a lower strike price and sell to open call options at a higher strike price
• positive : cheaper than buy call options, limited loss
• negative : limited profit
• market outlook : a moderately bullish market. We expect the stock price would go up but not exceed the higher strike price
• profits = ( higher strike price - lower strike price ) - ( lower strike call options premium - higher strike price call option premium )
• loss = net debit premium paid
• bep = lower strike price - net debit premium paid

Invest Tool at http://investtool.blogspot.com/

• covered put is the opposite of covered call. Covered Put is a strategy in Online Options Trading that sell the stocks and sell the put options.
• order : sell to open stocks and sell to open put options
• positive : time decay benefits the trader
• negative : the loss is unlimited and the profit is limited
• market outlook : slightly bearish to neutral
• profits = put option premium + ( selling price of the stocks - put option strike price )
• loss = unlimited
• bep = price of the stock + put option premium
• caution : like covered call, covered put strategy doesn't suit with high volatility stocks. Covered put is more dangerous than covered call because the limit of stock price to go up is the sky ( not like covered call, the limit is zero )