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The Different Option Strategies
Options, unlike shares, can be used to trade any outlook for a share or index. Perhaps you believe a stock will trade sideways for the next few months. Options can be used to trade this view. This page lists the more common option strategies and how to use them.
When trading stocks there are only three options available to the investor or trader -

  • Long - benefit from rising prices
  • Short - benefit from falling prices
  • Flat - no position

But with options so many more different potential outcomes can be traded, theoretically taking advantage of any conceivable market view.

For example Vodafone may be trading at £1.30 and 2 option traders might have opposing views. One believes the stock has the potential to rise significantly higher over the next few months, whereas the other thinks the price will slightly fall, but won't go below £1.10.

Both views are easily traded via options but of course each option trade will have its own associated risks and returns. For example, selling short options, can in the wrong hands, be an extremely risky trade.

Common Option Strategies
Some of the more common option strategies are listed below. These will enable traders to take advantage of any potential move in a share's price.
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  • For my personal trading I like to use Core Spread
  • Got to love their ultra low bid-offer spreads

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