Bearish pressure on a stock can generate profits for short sellers. It can also earn money for option traders. Using a bear call spread, a net premium is earned, and this income will be pocketed if the stock makes just a modest decline.
Related To: Call Options
If you want a conservative option investment that controls losses, take a look at the butterfly strategy. This derivative tactic comes with finite profitability, but also downside protection. The butterfly play is best for stocks that have low volatility.
A call option is a contract that gives you the right, but not the obligation, to buy an asset at a specific price within a set time period. Call options are one of the two basic types of options (the other being put options), and understanding them is essential for anyone looking to trade options.
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