Tuesday, February 14, 2012

Profitable Options Trading By Selling Call And Put Options

By Robert Williams


Selling Call or Put Options to people has been included as part of many options trading strategies. This can be a way to generate money relatively easily. But, you will want to thoroughly understand about the successful methods of using this option so that you can make knowledgeable decisions and reduce your level of risk.

Selling a Put or Call Option will start with a contract that includes the length of time the option will be in play and the Exercise Price. The exercise price is sometimes referred to as a "Strike Price" and is the price at which the underlying asset can be bought (if it's a call option), or sold (if it's a put option).

The difference between the market price and fixed Exercise Price at the time the option is acted upon is the premium that you will sell the option for. The higher that this difference is, the greater profit you can make on the option. Learning how to read and analyze trend reports will help you to calculate when the best time to sell an option to someone else will be.

There are some great programs and training modules available to help you learn about trends and how to analyze stocks. This will also help you to develop the most effective strategies for meeting your goals.

It is important, when you are considering this strategy that you stay within your comfort zone. Do not sell more than you are willing to buy back. While you have contracts in play, it is important to watch the stock and exercise your right to buy back the option if you see an unexpected change approaching. It is also important to keep track of your total outlay when you are selling.

Training is a key to making effective, strategic decisions. Talking to people who use options trading strategies successfully will be very beneficial. They will be able to share techniques and methods that will help you to successfully reduce the level of risk associated with this type of strategy. Most of the individuals who use this strategy are trading on long positions that are neutral. This allows them to consistently generate revenue even when the stock is not moving.




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