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Uncover the Secrets of Professional Options Traders

Written by admin
Mon Jan 16 2023
Uncover the Secrets of Professional Options Traders - MarketXLS
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Uncover the Secrets of Professional Options Traders - MarketXLS

Uncover the Secrets of Professional Options Traders

Options Trading, which involves the purchase of contracts that give the buyer the right, but not the obligation to buy or sell an underlying asset at a specified price, is becoming an increasingly popular form of trading among professional traders. There are two types of options: Put Options and Call Options. This article will explore some of the popular strategies employed by professional options traders and explain how these strategies can be used to increase profitability.

Put and Call Options: The Basics

Put Options grant the buyer the right, but not the obligation, to sell an underlying asset at a predetermined price on or before a specified date. An example of this type of contract would be a Put Option to sell a stock at $50 before the expiration date.

Call Options grant the buyer the right, but not the obligation, to buy an underlying asset at a predetermined price on or before a specified date. An example of this type of contract would be a Call Option to buy a stock at $50 before the expiration date.

Spreads – Managing Risk/Reward Ratio

A popular options trading strategy used by professional traders is known as a spread. A spread is an options contract which involves the simultaneous purchase and sale of options on the same underlying asset.

This strategy is used by professional traders to manage their risk/reward ratio. The most popular types of spreads are the Bull Call Spread and the Bear Put Spread. With these spreads, the trader purchases a call option and sells a call option and/or purchases a put option and sells a put option. The trader can then adjust the options in order to determine the highest profit potential and lowest risk.

Straddles and Vertical Spreads

Another popular options trading strategy used by professional traders is known as a Straddle. A Straddle is an Options contract that involves the simultaneous purchase of a Call Option and a Put Option with the same strike price and expiration date. By purchasing both options, the trader is able to benefit from any price action in the underlying asset, regardless of the direction of the price movement.

In addition to Straddles, professional traders also employ Vertical Spreads. Vertical Spreads are similar to Straddles, but involve the purchase of an option with a lower strike price and the sale of one with a higher exercising price. The goal of this strategy is to take advantage of Moderate price changes in the underlying asset, while limiting losses in the event of extreme price movements.

Strangles

The final option trading strategy employed by professional traders is known as a Strangle. A Strangle is an Options contract that involves the simultaneous purchase of an Out-of-the-Money Call and a Put Option on the same underlying asset. The trader profits from this strategy when the price of the underlying asset moves in either direction, in contrast to a standard Straddle, which only profits from extreme price movements in either direction.

MarketXLS and How it Can Help

MarketXLS is a powerful software suite that can help traders monitor the markets and generate profitable trading strategies. marketXLS has an extensive library of options and strategies, making it easy for traders to analyze potential trades and manage their risk/reward ratio. Additionally, MarketXLS has powerful tools to analyze historical data and construct complex options strategies with relative ease.

Options trading can be a profitable endeavor and by utilizing the strategies outlined in this article, traders can tailor their trades to meet their specific risk/reward requirements. By leveraging MarketXLS, traders can quickly and easily analyze multiple options scenarios, allowing them to construct their strategies with confidence.

Here are some templates that you can use to create your own models

Search for all Templates here: https://marketxls.com/templates/

Relevant blogs that you can read to learn more about the topic

5 Successful Options Strategies Using The Most Liquid Options
Maximizing Returns With a Call Debit Spread
The Benefits of Using Call Credit Spreads for Trading
Best Options To Buy (Use Marketxls For Research)
Mastering the Art of Shorting Call Options

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