Options

Selling Cash-Secured Puts for Income

As an option trading strategy, selling naked or short puts is highly risky and only recommended for experienced investors. There are differences between selling a cash-secured puts and selling a naked put. In either case, Ally Invest encourages you to stay mindful of the risks. What is a naked put? If you short a put, […]

Options

Fig Leaf Strategy

The fig leaf strategy is also known as a leveraged covered call. Here’s how it works: buying a Long-term Equity AnticiPation Securities (LEAPS) call gives you the right to buy the stock at strike A. Selling the call at strike B obligates you to sell stock at that strike price if you’re assigned. This strategy […]

Options

Short Put Spread

A short put or short vertical spread obligates you to buy the stock at strike price B if the option is assigned but gives you the right to sell stock at strike price A. A short put spread is an alternative to the short put . In addition to selling a put with strike B, […]

Options

Back Spread with Calls

Also known as Ratio Volatility Spread or a Pay Later Call, the back spread with calls is an unusual strategy. Essentially, you’re selling an at-the-money short call spread in order to help pay for the extra out-of-the-money long call at strike B. Establish this strategy for a small net credit whenever possible. That way, if […]

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 […]

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