Options trading recomendations
You can see a full list of all the reviews we provide here. This site comprehensively covers everything you need to know about options trading, ranging from the fundamental basics right up to advanced strategies. If you are a complete beginner you will find all the information you need to get started, explained in a way that is easy to understand. If you are a more experienced trader looking to expand your knowledge then you will find plenty of advanced subject matter that will help you to improve your trading skills.
It is possible for anyone to get involved with this, but there is a lot to learn on the subject. To make it easy for you to find exactly what you are looking for we have divided the site into several clearly defined sections. These are as follows. Beginners should start with the first section and then work through each section in order, while those of you looking for specific information will probably prefer to skip straight to the relevant area.
If you would like to know more about what these sections are all about, you can find details on each of them further down the page. There are also a few other articles which you may be interested in. We have written a page explaining in full what this site is all about, and introducing the people behind it. We have compiled a useful glossary of terms too, which is a comprehensive list of the jargon and technical words used. For those of you interested in such things, we have also written a complete history of options.
This details how the market evolved over time to create the thriving industry which exists today. This introduction has been compiled specifically with the beginner in mind. If you are completely new to all of this, or investment in general, then this section is the best place for you to start. We have included detailed articles to explain exactly what a contract is, and what it is is all about. We have explained the benefits and the risks involved, where you can buy and sell contracts and how the contracts work in practice.
Finally, we have provided detailed explanations of the key terms and phrases that you will come across — such as moneyness, leverage, margin and time decay.
Short Call Key Advantage — Will still make a return if the underlying security remains stable. Short Bear Ratio Spread Key Advantage — Some protection if the price of the underlying security rises or fails to move. Key Disadvantage — Lower potential profits than the Long Put. Fall to a Specific Level If you are expecting the underlying security to fall in price, and are reasonably confident that it will fall to a specific level, then the following strategy can help maximize your profits: Bear Butterfly Spread Key Advantage — Losses are limited if the price of the underlying security does not move as expected.
Key Disadvantage — The multiple transactions required mean incurring higher commissions. No Move The following strategies are recommended for when you forecast that the price of an underlying security will stay the same for a period of time: Short Straddle Key Advantage — You will receive an upfront payment when using this strategy. Short Strangle Key Advantage — Can also profit if the price of the underlying security does move a little. Key Disadvantage — Profits are fairly limited.
Butterfly Spread Key Advantage — This strategy has low upfront costs. No Move or Small Move in Either Direction The following strategies are suitable for when you believe the price of the underlying security will remain relatively stable but might move a little in either direction. Short Gut Key Advantage — Can profit from three circumstances; stable price, small increase, or small fall. Key Disadvantage — There is the possibility of large losses from big price moves.
Condor Spread Key Advantage — The potential losses are limited. Key Disadvantage — The potential profits are lower than comparable strategies. Albatross Spread Key Advantage — Can profit from a wider range of price moves than other similar strategies.
Key Disadvantage — Potential profits are limited. Stable in Short Term with a Breakout in Long Term If you believe that the price of an underlying security will remain relatively stable in the short term but that will move in either direction in the longer term, the following strategies are recommended: Calendar Strangle Key Advantage - Potential losses are limited. Key Disadvantage — Multiple transactions mean more paid in commission charges.
Calendar Straddle Key Advantage — Flexible position that can easily be adjusted if your outlook changes. Key Disadvantage — Higher commission charges due to number of transactions involved.
Stable in Short Term with a Rise in Long Term In circumstances where you expect the price of an underlying security to be fairly stagnant in the short term but then rise in the longer term, the following strategy is worthy of consideration: Key Disadvantage — There is a risk of your call options being assigned.
Stable in Short Term with a Fall in Long Term If you believe the price of an underlying security won't move much in the short term but start to fall in the long term, the following strategy is recommended: Stable but a Possible Rise When you believe that the price of an underlying security is unlikely to move but may possibly rise and want to cover both outcomes, then the following strategy is recommended: Covered Call Key Advantage — Can profit from a price remaining stable and a rising price.
Stable but a Possible Fall The following strategy is suitable if you expect the underlying security to remain stable but think it may possibly fall in price: Covered Put Key Advantage — Can profit from a price remaining stable and a falling price.
Key Disadvantage — Limited profits to be made. Significant Move in Either Direction If you believe that an underlying security is volatile and likely to move significantly in price but you are unsure in which direction, then the following strategies are suitable to use: Long Straddle Key Advantage — Profits are potentially unlimited. Key Disadvantage- Requires a larger price move than the Long Straddle.
Significant Move in Either Direction but Rise More Likely The following strategies are good choices when you believe the price of an underlying security is volatile and think that a significant rise is more likely than a significant fall: The Options Report is suited to traders wanting to make money from trading options as well as investors looking to maximise or protect returns from their portfolios.
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Options Report The Options Report is suited to traders wanting to make money from trading options as well as investors looking to maximise or protect returns from their portfolios.