The contracts of sale and purchase is popularly known as option contract. There are wide varieties of option strategies which use multiple legs at the structure. The long call option is a investment plan the other option known as put option is very popular and helps to analyse the market movement
The call option comes handly when the market is trading higher. Once the customer broke even from the break even point his poison has the potential to earn unlimited profit. In a selling market the call becomes worthless as traders opt for the put option which becomes increasingly profitable The investor must be clear about the Market direction for the better return about from the call option instrument. If the market price of the option contract implies if 50% more expensive than the historical prices than the investor may decide against buying the option and may make a move to sale it instead. In call option if the inverse observes growth of more than 50% than the investor would sell the instrument.
Option strategies can favour underlined stocks if they are bullish or bearish or neutral. In case if the strategy is neutral they can be further classified into those are bullish on volatility and those that are bearish on volatility. The option call can be taken up anytime for short position and long position in the market.
Bearish option strategy are the opposite of the bullish strategies they are taken up when the option trader expects the stocks to move downward. For any investor it is must to know when the market will move upward and when it will go down. The anticipation of the market movement is the key to earn profit.
For option trading one should not be a expert in maths or economics. If we put this simply across option can be termed as contracts which are guided by a pre determined term in a pre specified period.
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