Las Vegas, Nevada (PRWEB) September 19, 2012
Trading equity and index options can provide a lucrative source of income if done correctly. A trader needs to learn how to trade options and implement advanced options trading strategies to avoid excessive risk. AvantOptions.com provides options education and trade picks which can teach subscribers different options trading strategies for producing income.
Basic options trading strategies would include the buying or selling of calls or puts.
Buying a call gives the buyer the option to buy the stock at the designated strike price.
Buying a put gives the buyer an option to sell the stock at the designated strike price.
Basic options strategies are generally used to hedge a trader’s underlying position or to allow the trader to speculate on market movement.
Alternatively a person can sell calls or puts using spreads. Options spreads are a strategy generally used to make a bet that the stock will not hit the strike price before the option expires or to allow the trader to go long or short the stock at a price they don't mind being long or short the underlying contract.
Advanced options trading strategies normally involve the use of several options or "legs" as they are commonly called in option spreads. When a trade has multiple legs or options involved the trade is usually referred to as a "spread". Spread trading is used in situations where a trader wants to minimize their risk on a trade while still allowing for an acceptable return on their investment.
Common Advanced Options Trading Strategies that can provide income:
Credit Call Spread: A trader sells one out of the money call and buys a further out of the money call for protection. The trader can earn the price difference or premium between the two options and their risk is limited to the number of points between the two strikes.
Credit Put Spread: A trader sells one out of the money put and buys a further out of the money put for protection. The trader can earn the price difference or premium between the two options and their risk is limited to the number of points between the two strikes.
Credit Condor: A condor is the combination of a call spread and a put spread. This strategy involves four legs. The trader sells an out of the money call spread and an out of the money put spread, collecting a premium from both spreads.
Option Trading Education:
It is advised that a trader new to options trading seek guidance and education. One firm, Avant Options provides a trade picking service for traders interested in earning income from options trades. Avant Options carefully monitors the pricing of Index Options Spreads and issues trade alerts on these products when the circumstances are appropriate. Avant Options has a three year track record with their trade picks and frequently earns over 20% annual return.
The equity options market can be a great place to invest your money. Take things slow and learn what you are doing as all trading incurs risk. Check out Avant Options if you are interested to learn more about option trading for income.