Options

Cash-Secured Put Strategy

Selling the put obligates you to buy stock at strike price A if the option is assigned.In this instance, you’re selling the put with the intention of buying the stock after the put is assigned. When running this strategy, you may wish to consider selling the put slightly out-of-the-money. If you do so, you’re hoping […]

Options

Long Put Spread

A long put (or long vertical) spread gives you the right to sell stock at strike price B and obligates you to buy stock at strike price A if assigned. This strategy is an alternative to buying a long put . Selling a cheaper put with strike A helps to offset the cost of the […]

Options

Synthetic Long Stock

Also known as a long combination strategy, buying the call gives you the right to buy the stock at strike price A. Selling the put obligates you to buy the stock at strike price A if the option is assigned. This strategy is referred to as synthetic long stock because the risk/reward profile is nearly […]

Options

Long Call Strategies

A long call gives you the right to buy the underlying stock at strike price A. Calls may be used as an alternative to buying stock outright. You can profit if the stock rises, without taking on all of the downside risk that would result from owning the stock. It is also possible to gain […]

Options

Protective Put Strategies

About the Security Options are contracts which control underlying assets, oftentimes stock. It is possible to buy (own or long) or sell (write or short) an option to initiate a position. Options are traded through a broker like Ally Invest, who charges a commission when buying or selling option contracts. Before trading options carefully consider […]

Options

Put Options Explained

It's strange but true: many investors who are perfectly comfortable trading call options get a little squeamish around put options. Puts are certainly nothing to be afraid of. When used properly, they can add a whole new dimension to your trading. What are puts, exactly? Put options are basically the reverse of calls: a call […]

Options

Bullish and Bearish Option Trading Strategies

If you're interested in trading options, you'll find that the markets can be responsive and dynamic. Trading with Ally Invest provides insights and tools that can help you find appropriate option trades for just about any market outlook or environment. These trading environments can be categorized as bearish, bullish, neutral, or volatile. Each has its […]

Options

Buying Puts vs. Short-Selling

If you're bearish on a stock, you can try to capitalize on this view in a few ways: Sell the stock, if you own it. Sell the stock, even if you don't own it, by borrowing shares via your brokerage firm. Then, at a later date, buy the shares (hopefully at a lower price) to […]

Options

What is Implied Volatility?

Implied volatility (IV) is one of the most important concepts for options traders to understand for two reasons. First, it shows how volatile the market might be in the future. Second, implied volatility can help you calculate probability. This is a critical component of options trading which may be helpful when trying to determine the […]

Options

Collar Strategies

You can think of a collar as simultaneously running a protective put and a covered call. Some investors think this is a sexy trade because the covered call helps to pay for the protective put. So you've limited the downside on the stock for less than it would cost to buy a put alone, but […]