Being a trader is always unpredictable. Sometimes it feels like an adrenaline rush, and sometimes everything stands still. The stock market is never steady, the fluctuations must be considered when doing every other step.
Before starting it’s crucial to choose a reliable platform to work with that will lead you through the trading experience. PocketOption is a tried-and-tested application that will help beginners try their hand at trading; as well as come in handy for professionals.
While professional and experienced traders know how everything works with all the ins and outs of the market, beginners may have little understanding. Before jumping into trading it’s important to anticipate the risks in order to maximize the profit. The basic strategies are not rocket science, so with little effort, it is possible to have the best out-of-the-stock options.
1. Covered Call
A popular strategy to use as it generates income and reduces the risk of a long-term stay on the market. To perform this strategy, you need to buy the underlying stocks and at the same time sell the calls on a share-for-share basis.
This strategy combines a long position with a short call option which results in higher returns and lower volatility.
Covered calls are often called “free money”. Its main focus is on immediate cash.
2. Bull Call Spread
This strategy involves one long call and a lower strike price, and one short call with a high strike price. Long and short calls have an equal expiry date and the underlying stock.
Bull call spread has a low probability of succeeding, yet the reward is high. It can only be used when the stock market experiences upward growth.
3. Long Strangle
The strategy is also called a purchase strangle. Strangles are bought before a product introduction, earning reports, or FDA announcements. Purchasing straggles is a low-risk strategy where the reward and risks go down when the distance between the strikes is getting bigger.
Trading is risk, fun, and money. A successful trader is the one who isn’t afraid of risks in order to have fun and good profit.