Option Trading Strategies

This is an introduction to various option trading strategies from basic trades to complex, multi-leg trades. The strategies are grouped by market direction to help you decide which strategies might work best, based on your opinion of which way you believe the underlying index or stock is going to move. Once you've isolated on a security you believe will either go up, down, or stay flat, use this guide to help you choose a strategy which meets your risk/reward criteria. We've also added option strategies for those who are interested in hedging or generating income. You'll find that several of the strategies fit into more than one category.

Option Trading Strategies for a Bull Market - Strategies for trading options when you believe a certain stock or index will go up in value. Bull market strategies include:

• Buy Calls
• Sell Naked Puts
• Bull Call Spreads
• Bull Put Spreads
• Call Back Spreads

Option Trading Strategies for a Bear Market - Strategies for trading options when you believe a certain stock or index will go down in value. Bear market strategies include:

• Buy Puts
• Sell Naked Calls
• Put Back Spreads
• Bear Call Spreads
• Bear Put Spreads

Option Trading Strategies for a Neutral Market - Strategies for trading options when you believe a certain stock or index will remain relatively stable, or you believe it will move, but are unsure of which direction. Neutral market strategies include:

• Reversals
• Conversions
• Collars
• Straddles
• Strangles
• Butterflies
• Ratio Spreads
• Condors
• Calendar Spreads

Option Trading Strategies for Hedging - Strategies for trading options when you want to protect your portfolio or concentrated stock positions from a down turn in the market. Hedging strategies include:

• Protective Puts
• Married Puts
• Collars

Option Trading Strategies for Income - Strategies for trading options when you want to generate streams of income. Income generating strategies include:

• Covered Calls
• Sell Naked Calls
• Sell Naked Puts
• Iron Condors
• Credit Spreads

The Clark Financial Group can help you implement all of your option trading strategies. We provide our clients with discount commissions, online trading convenience, and the support of an experienced broker at no additional cost. For more information, call us at 1-800-797-1979 or compare our combination of low fees and extensive services to see if we're right for your option trading needs.

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All securities products and services are offered through brokersXpress, LLC, member FINRA/SIPC,  a Registered Investment Advisor and Registered CFTC Introducing Broker/NFA Member. Online trading has inherent risks due to system response and access times that vary due to market conditions, system performance and other factors. Options involve substantial risk and are not suitable for all investors. Individuals should not enter into option transactions until they have read and understood the risk disclosure explained in Characteristics and Risks of Standardized Options (PDF), published by and available from the Options Clearing Corporation by calling 1-888-678-4667.  Futures involve substantial risk and are not appropriate for all investors.  Individuals should not enter into futures transactions until they have read and understood the risk disclosure explained in Risk Disclosure Statement for Futures & Options (PDF).  Both the options and futures risk disclosure documents are available from Charles Clark, 7300 W 110th St Suite 700, Overland Park, KS 66210, (800) 797-1979. Privacy policy is available upon request. All rights reserved. © 2006 brokersXpress, LLC. Corporate address: 311 West Monroe, Suite 1000, Chicago, IL  60606; phone (888) 280-7030.