If you’re shorting stocks, there’s a way you can do it while protecting your upside risk. Using an option spread, the short stock position will be protected during the lifetime of the derivatives. The strategy can also earn a small amount of income at the outset of the trade. Here’s a rundown on using short collars.
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Options trading can often seem like a complex maze, but one strategy stands out for those with a bullish outlook on the market: the bull put credit spread. This multi-leg, risk-defined strategy has limited profit potential but can significantly benefit from an increase in the underlying asset's price before expiration.
IV crush is a phenomenon that occurs when implied volatility (IV) drops significantly after an event or earnings announcement. This can cause option prices to decline, even if the underlying stock price remains unchanged. Why Does IV Crush Happen? IV is a measure of the expected volatility of a security over a period of time.
Options trading can be a great way to generate income, reduce risk, or speculate on the future direction of the market. However, it is important to understand the risks involved before you start trading options.
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