Long Call Option Trading

On the one hand, the long call options trading refer to the strategy that involves the buying call option wherein the outlook for trading is what they call as the bullish. This means that the expectation must be that the prices of stocks will rise. The advantage of this is that the trader will be able to enjoy unlimited potential profits without worrying about too much risk.

Long Straddle Options

On the other hand, the long straddle option is another special strategy in options trading. Wherein the position is long but it requires the investor to purchase both the call option as well as the put option of different derivatives. One can make profit from this kind in the CFD trading, for instance, if the prices of the underlying instruments move a long way relative to the strike price.

Bear Put Spread Strategy

Furthermore, the bear put spread is another strategy in share dealing and options trading that is being used when the trader is assuming that the price of the underlying assets will most likely go down in the near future. What this means is that the period is not a long period, but not a short term as well. Aside from that, another things that you must learn about the bear put spread strategy is that this is being done by buying a put option with a higher striking and then you will sell it for a lower striking put option under the similar expiration date.

Covered Call

Another strategy in options trading is the covered call. Unlike the first three mentioned above, this one is a kind of call option that is written relative to the holding of an underlying stock or security. This is being done in order to get or earn premium writing calls as well as enjoy the benefits of underlying stocks.

Bull Put Spread

Lastly, the bull put spread is the opposite of the bear put spread in share dealing. This is because, in here, the prices of the underlying assets being traded are expected to go up gradually in the coming days or months. The period is also medium term instead of either short or long.

1) Weekly USD/JPY 20/08 8800 call. Opened price: 20.5 why? because I do believe it is near bottom and 20/8 gives some time to recover.

2) Daily oil 8060 put opened price: 5.9 why? Change in EIA Natural Gas Inventories will be announced in 40 minutes. The black gold tends to react strongly in the 30 minutes after.

For a while I was trying to fight the trend. This is a mistake. Although sometimes swimming against the flow can be profitable most of the time it is just difficult.

That’s why when the market direction is up, there is no point to go short. But… it is not a secret that since March bottom the market was going in one direction with very few corrections. Many people will say that a big correction is due to come and September is a bad month anyway!

They may be right and we may see a change of direction but until that happen, I would not recommend to open a short position. But you can do what I’ve done: Bought some shares that I believe their trend is up but back-up it with a put option for October. You can still find them cheap so for 40-50 points you can have a back-up if something will change.

I myself bought FTSE 4500 put for October a bit expensive at 86 points, but still I am happy with this insurance.

All of these put my Dax 4000 Put for May call value on the lowest you can imagine (6 points when I bought it for 36). This wasn’t good. I was speaking with my friend that holds the same positions and both of us agreed that the market is almost on its peak and the only way is down.

So we checked to buy the Dax 4400 Put for May. The price was 66 around 17:00. I though that if the Dow will finish on high note then the option will be worth 60 or less and I will buy it. But I forgot to check. You know Friday evening is not the best time to deal.

Anyway it touched 62 and the weekend has started. A new week and the markets again see red. The Dax lost 190 points in one day. This means two things:

1) My 4000 Put worth 34 now (300% in one day)

2) 4400 put that I didn’t buy worth around 125 (100% in one day)

All I can do is blame myself. I knew that the market will go down but combination of tiredness and fear of losing more prevented me to take a huge profit. Another painful lesson has been learned.

I have bought today a put option on the Dax. Why the Dax? The FTSE 100 didn’t jump as high as the German one or the Dow. While the Dow jumped from 6500 to 8000, and the Dax from 3600 to 4500, the FTSE was much more solid and jumped from 3500 to 4000.

So if I am right and the market will change direction, my logic says that the FTSE will slide slower than the other two. So I left with 2 options. The Dow options seem to me expensive so I’ve decided to choose the German index.

Bought it for 36.3. The lowest price today was 30 but I missed the bottom. I guess you can’t catch the bottom. So I have 4.5 weeks and my target is to double the money. I will keep you updated.