Options Trading Strategies to Grow Your Account Quickly in 2022
Options trading is not as complex as the term makes it sound. It is, in fact, one of the easiest ways to enhance returns without putting your portfolio at much risk. Make sure you have good knowledge in the area, and you’re good to go. If you’re not sure about it, join an options trading program and build enough confidence to get started with some basic strategies. You will then think like a smart options trader.
Here are some options trading strategies you can use in 2022:
Long OTM Bullish Call Spreads
An excellent positive delta strategy can be buying long out-of-the-money (OTM) calls and selling further OTM calls to keep the initial costs lower while still reaping profits. The max loss is the amount paid while entering the position. This allows you to trade a larger position.
Covered call
A covered call strategy adds income to an existing long stock position. The trader sells one call for every 100 shares they own. Ten calls for every 1,000 shares.
Protective Put Position
A protective put position defines risk to the downside for your long stock position. It also reduces margin for your position. You buy one put for each 100 shares that you are long the stock. Ten puts for 1,000 shares.
Long straddle
A long straddle strategy can be ideal for situations when the price of the underlying asset is likely to move dramatically, but the trader is not sure about the direction of its movement. In such a situation, they may choose to buy a call option and a put option on an underlying asset having the same expiration date and strike price.
Credit spread strategy
Some traders may like to determine their profit and risk potential before trading options. If you belong to the same group, the credit spread strategy is for you. Trading credit spreads allows you to reduce risks by calculating the exact sum of money at risk while entering the position. The key to success with credit spreads is to learn how to make adjustments to them.
Time Value Spreads
This is a great way to harvest profits when you expect the market to be trading in a tight channel. You sell a nearby option while buying a further out option. Your risk is defined by the price you pay for the spread.
Forget Trailing stop strategies
Learning how to spread your options builds trailing stops into your position. That way you have eliminated overnight risks, unlike trailing stops. Leave trailing stops for the amateurs.
The bottom line
No matter how much you read about options online, that “what if” aspect will continue to haunt you. The best way to get rid of your doubts can be to reach out to experts with years of experience understanding the market and trading options. You can look for a one-on-one or group mentoring program online or buy educational modules, whichever suits you the most. After learning the basics, you can use the above strategies and grow your account.
At Option Thinker, we offer individual and group options sessions for people willing to make it big in the world of options trading. If you’ve been looking to learn more about OTM options strategy and other options trading methods, give us a call at 312-882-1116 or write to us at dan@optionthinker.com
