Nearly pages of Option Trading subjects and strategy graphs: Option Strategy of the Week. The position will gain if the stock rises by at least the amount of the initial debit.

But, not too bullish, since the position can lose on too much of a move. Buy an ATM call, sell two OTM calls. Stock rises but not too far. Limited to the difference in strike prices less the initial debit. Stock does not rise or rises too much. Advantages compared to stock: Leverage, limited loss to downside. Disadvantages compared to stock: Loss if stock rises too far, no dividends.

Your broker will see this trade as a bull call and naked short calls. The short strike can be anywhere you wish, with the long strike below that. Wherever you put the short strike, that is where the "sweet spot" will be. Questions, corrections, suggestions, comments to: Interested in option calculators or option graphing software?

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Learn how to trade options. Search option-info and options-graphs sites: Why Trade Stock Options? The Basics of Stock Options How to: Trading Stock Options How to read Option Graphs Option Trading Strategies by Outlook Vertical Spread Option Strategies All Bull Call debit spread graphs All Bull Put credit spread graphs All Bear Call credit spread graphs All Bear Put debit spread graphs How to: Diagonal Spreads Choosing a long option Strike Price Choosing an Option Expiration date Pyramid In or Average Out?

Option Buying StrategiesOption Selling Strategies Covered Call Strategies Disadvantages Percent to Double ETF Trading with Options Free Rides: Guaranteed Winning Trading Strategies? Delta-Neutral Trading Explained Stock Repair Strategy Stock Enhancement The Option Greeks Forex profit accelerator free download Terms Trading Rules, Tips, Techniques Option Trading Books Options Trading Links The Visual Basic Option Graph Project Search option-info and options-graphs sites: Option Etf option strategies of the Week Strategy: Ratio Call Spread The Outlook: Comments This strategy might be used if you thought there was a good chance of the stock rising to the short strike before expiration, but not further.

The intent of this trade is to be bullish by owning a long call, but help pay for the call by selling two calls at a higher strike. It is exchange rates nzd to inr to enter this etf option strategies for a credit when the implied volatility is high.

If you enter for a credit, there is no risk to the downside, and the strategy will benefit from any drop in the implied volatility. However, the implied volatility being high may be a sign the market thinks the stock might have a good move higher, which would cause a loss for the position. Before using this strategy, consider adding an inexpensive long call at a higher strike.

That turns the trade into a Butterfly. The Butterfly will maintain about the same risk and reward over the bullish price move you expect, without the unlimited risk if the stock goes too high. Also compare this strategy to a Bull Call, ATM.

Tip 7 - Trading ETF Options | Terrys Tips

The entry debit will be higher, but if the stock rises more than you think it will, you can keep the gains instead of giving them all back or having a loss. Exits This is a psychologically difficult trade.

Using ETF Options To Harvest Income And Manage Market Volatility | Stock News & Stock Market Analysis - IBD

If the stock moves higher as you expect and reaches the short strike before expiration, you may not know what to do. If you hold on and the stock stays where it is, your gains will increase quite a bit just by the passage of time. But if the stock moves higher or lower, you start giving back the gains. The best course of action might be to exit the position if the stock reaches the short strike price, whenever that is. If the stock falls instead of rising, you might try to take about half the maximum loss whenever that happens.

Adjustments If the stock rises near the short strike, it is possible to stick with the trade by buying enough stock to cover half the short calls. Then there is no further risk of loss to the upside, and you may be able to keep the entire gain as if you had entered a bull call.

However, you would then have a lot of stock risk and could lose if the stock reverses and goes lower.