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Consider using options strategies like spreads and straddles to diversify your portfolio from "summary" of How I Made BIG Money Trading Stock Options by Carl Schoner
Options strategies like spreads and straddles can be valuable tools for diversifying your portfolio. By incorporating these strategies into your trading approach, you can potentially reduce risk and enhance your overall investment returns. One common options strategy is known as a spread, which involves buying and selling options on the same underlying security but with different strike prices or expiration dates. This approach can help you capitalize on market trends while minimizing potential losses. For example, a bull call spread involves buying a call option at a lower strike price and selling a call option at a higher strike price. This strategy allows you to profit from an upward move in the stock price while limiting your downside risk. On the other hand, a bear put spread involves buying a put option at a higher strike price and selling a put option at a lower strike price. This strategy can help you profit from a downward move in the stock price while again limiting your potential losses. Another options strategy to consider is a straddle, which involves buying both a call option and a put option on the same underlying security with the same strike price and expiration date. This approach can be useful when you anticipate a significant price movement but are unsure of the direction.- You can diversify your risk and potentially improve your overall investment performance. These strategies provide you with flexibility and the ability to profit in various market conditions, making them valuable tools for any options trader looking to achieve big returns.
