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Long Straddle, Short Straddle |
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This strategy is both a Bullish & Bearish trade, forecasting explosive movement either way. The trader should purchase at the money or near money call and put option with the same strike price and with the same expiration date. This way, the trader can take advantage of any sudden movements in price regardless of direction.
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Long Strangle, Short Strangle |
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This strategy is similar to the Long Straddle, except that the trader purchases the call option(s) and the put option(s) at different strike prices.
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Call Ratio Spread |
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Note: Ratio spreads are utilized if the investor doesn't want the market to move much either way once they make their trade. In that respect, it is considered a neutral strategy. This trade involves selling a call (usually at-the-money or near-to-the-money) at a lower strike and buying a greater number of calls at a higher strike price.
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Collars |
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Also known as a fence or cylinder, collars are used by traders to protect an existing stock position.
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Naked Puts |
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Also known as an uncovered put, a naked put is a short put option position in which the writer (seller) does not have the corresponding short position in the underlier, or has not deposited an amount equal to the exercise value of the put in a cash account.
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Put Ratio Spread |
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Note: Ratio spreads are utilized if the investor doesn't want the market to move much either way once they make their trade. In that respect, it is considered a neutral strategy. To make a put ratio spread, the investor must buy puts at a higher strike and sell a greater number of puts at a lower strike.
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Long Condor, Short Condor |
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The condor is basically a butterfly stretched over four strike prices instead of three. It takes the body of the butterfly (two options at the middle strike) and splits it between two middle strikes rather than just one. It can also be viewed as a combination of a bull and bear call spread.
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